SEBI extends T+1 securities-transfer timeline, deadline for payout to clients

Capital markets regulator SEBI has issued two key circulars on changes in timing for securities payout in the activity schedule for T+1 rolling settlement and the extension of the deadline for the direct payout of securities to client account to November 11.

Change in timing for securities payout for T+1 rolling settlement: SEBI on June 5, 2024, had mandated that the pay-out of securities be credited directly to the client account by the clearing corporations (CC). Under phase-1, the securities for pay-out in the equity cash segment, including netted cash and F&O physical settlement, will be credited directly to the respective client’s demat account, it says.

For this, the timing of the securities payout will be revised from 1:30 PM to 3:30 PM, says SEBI. "As a result of direct payout, the securities shall be credited to the client’s demat account on the same settlement day instead of one working day from the receipt of pay-out from the CC."

The regulator has advised stock exchanges, clearing corporations and depositories to make necessary changes to implement and bring it to the notice of the market participants.

Direct payout of securities to client account: To protect the client’s securities, SEBI on June 05, 2024, had mandated the pay-out of securities directly to the client’s demat account. With regard to the funded stocks under the margin trading facility, SEBI said that they will be held only by way of a pledge. "For this, TM or CMs will open a separate demat account, in which only funded stocks in respect of margin funding will be kept, and no other transactions will be permitted. Such funded stocks will be transferred to the respective client’s demat account followed by the creation of an auto-pledge."

The circular was to come into effect from October 14, 2024. SEBI says the final operational guidelines or implementation standards were to be issued by CCs to the market by August 05, 2024. However, the said guidelines were issued by CCs at the end of August 2024 on account of extensive consultation in brokers’ industry standards forum (Brokers’ ISF).

Based on SEBI's review meeting with MIIs and representation from Brokers’ ISF, it was decided the circular will come into effect from November 11, 2024. "This will ensure smooth implementation of the pay-out of securities directly to the client’s demat account, without any disruption to the players and investors," says the regulator. The stock exchanges will bring this to the notice of members and participants, put in place systems to ensure compliance and make changes to their rules.