SEBI/HO/MIRSD/MIRSD -PoD/P/CIR/2025/82

CIRCULAR SEBI/HO/MIRSD/MIRSD -PoD/P/CIR/2025/82 To, All Recognized Stock Exchanges All Recognized Clearing Corporations All Depositories Madam / Sir, Sub: Margin obligations to be given by way of Pledge/Re-pledge in the Depository System SEBI, vide circular SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020 (hereinafter mentioned as 'Circular') and Para 41 of Master Circular for Stock Brokers dated August 09, 2024 (hereinafter mentioned as 'Master Circular'), mandated that the broker shall accept collateral from client in the form of securities only by the way of 'margin pledge' . The operational mechanism for initiation, release and invocation of margin pledge is provided at Annexure A of the circular and para 41.11 of the Master Circular. It has come to notice that after invocation of client's securities pledged in favor of demat account of brokers (i.e. 'Client Securities Margin Pledge Account' or 'Client Securities under Margin Funding Account'), such invoked shares are lying unsold resulting into the accumulation of clients ' securities in demat account of the broker. The said accumulation does not serve the purpose for which securities were invoked i.e. realization of moneys . Further, Brokers' Industry Standard Forum (Brokers ' ISF) highlighted operational difficulties of brokers where clients sell the pledged securities. In the current process, broker has to first un-pledge the securities sold by the client and thereafter June 03, 2025 securities are delivered to Clearing Corporation by broker using physical instruction or electronic instruction or DDPI/POA. Based on the aforesaid observation/representation of Brokers' ISF and with a view to facilitate ease of doing business as well as to safeguard the interest of investors , it has been decided to make the

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