SEBI circular on “unpaid shares” may lead to heavy market selling: Report

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SEBI circular on “unpaid shares” may lead to heavy market selling: Report

A circular from the SEBI has asked brokers to stop keeping “unpaid shares” in various accounts or even pledge them, with effect from November 1.

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Brokers have requested market regulator SEBI to extend the deadline of a circular barring them from keeping ‘unpaid shares’ in various accounts, a move that could trigger heavy market selling, according to a report in The Hindu Business Line.

Around 25 percent out of Rs 1 lakh crore worth of pledged shares could be unpaid, brokers told the publication.

“Securities lying with TM/CM (trading member/clearing member) in a client collateral account, client margin trading securities account and client unpaid securities account, shall not be permitted to be pledged/transferred to banks/NBFCs for raising funds,” the SEBI circular said.

In several cases, even shares that are lying with the broker after the client has availed margin funding are called “unpaid shares”.

There are also instances where high net-worth individuals (HNIs) do not pay the full amount but the brokers ask for interest on the full unpaid amount on the shares lying with them, the report added.

Source- Moneycontrol.