New Delhi: Capital markets regulator SEBI on Monday said all demat accounts of stock brokers, which are untagged, need to be properly tagged by the end of June.
Deposit of securities in any demat account without tag will not be allowed with effect from 1st July.
However, credit will be allowed on account of corporate actions, the Securities and Exchange Board of India (SEBI) said in a circular.
Tagging of bank and demat accounts indicating the purpose for which those bank/demat accounts are being maintained and reporting of such accounts to stock exchanges/depositories.
SEBI further said that from August, debit of securities will also not be allowed in any demat account without tag.
The stock broker will have to take permission from the stock exchanges to allow tagging of such demat accounts from August 1 and the exchanges in turn will have to give such approval within two working days after imposing the penalty as per their internal policy.
“All demat accounts of stockbrokers which are untagged need to be properly tagged by June 30, 2022,” SEBI said.
This framework will not be applicable for demat accounts which are used exclusively for banking activities by stock brokers who are also banks.
Presently, stockbrokers are required to maintain demat accounts only under five categories – Proprietary Account, Pool Account, Client Unpaid Securities, Client Securities Margin Pledge Account and Client Securities under Margin Funding Account.
Under the rules, it is voluntary to designate demat accounts owned by a stockbroker as ‘Stock Broker-Owned Account’ and the accounts which are not tagged will be treated as proprietary.
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