TMI BlogTrading supported by Blocked Amount in Secondary Market - to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.X X X X Extracts X X X X X X X X Extracts X X X X ..... econdary market trading and settlement process and hereinafter referred as UPI block facility . 2. Under the proposed framework, funds shall remain in the account of client but will be blocked in favour of the clearing corporation ( CC ) till the expiry date of the block mandate or till block is released by the CC, or debit of the block towards obligations arising out of the trading activity of the client, whichever is earlier. Further, settlement for funds and securities will be done by the CC without the need for handling of client funds and securities by the member. 3. Further, while a UPI block upon creation shall be considered towards collateral, the same shall also be available for settlement purposes. For the clients who prefer to block lump sum amount, their block can be debited multiple times, subject to available balance, for settlement obligations across days. 4. The main features of the framework are as under: 4.1. General features: 4.1.1. Availing UPI block facility shall be at the option of the investor. 4.1.2. Shall be introduced as a non-mandatory facility to be provided by the stock broker. 4.1.3. Since an investor is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d can be debited by the CC only. 4.3.4. The block shall support multiple debits i.e., for a block created on day 1, it can be partially debited multiple times till the exhaustion of amount or expiry/release of the block, whichever is earlier. 4.3.5. Since the CC shall directly maintain/update the client collateral value based on the blocking information received from the UPI railroads of National Payment Corporation of India ( NPCI ) through the CC s sponsor bank, the stock brokers shall not allocate any collateral for clients under the facility of UPI block. Other procedures such as deemed allocation of proprietary collateral, validation of 50:50 cash collateral, risk reduction mode monitoring etc. remain unchanged. 4.3.6. The CC shall debit the UPI block created in its favor to the extent of client level obligations, and receive the same in its account, without funds going through the clearing bank account of the CM. Securities provided as early pay-in (EPI) by the clients, using the block mechanism provided by depositories shall be received by the CC as per the prevailing process. 4.4. Settlement 4.4.1. There shall be two rounds of pay-in and one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -in rounds. The CC shall give pay-out of funds directly to the bank account of the clients opting for UPI block facility, provided they have fulfilled their pay-in obligations. The CCs shall provide instructions to depositories for securities pay-out to the clients, which shall be directly delivered to client s account without the need of handling of such securities pay-out by TM/CM. For all other clients and proprietary account of CM/TM, there shall be single net settlement by CC to CM as is currently being done. 4.5. Release of block 4.5.1. Client can request for release of block to TM through TM app. TM shall request CM, and CM shall request CC. In case the TM, CM and CC do not have any residual claim, the CC shall release the block through UPI. Upon release of the block, the client s bank shall unfreeze the amount in the account of the client. Information regarding release shall be shared by NPCI with CC (through CC s sponsor bank) who in-turn shall transmit it to CM and TM. Further, since the release of the block is going to result in collateral being unallocated in favour of the client, as per the existing process, the CC shall send a notification to the client re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities short delivered by UPI clients. 4.7.2.4. If actual amount required towards auction purchase or financial close-out exceeds the pay-out amount referred to in para 4.7.2.2 above, the same shall be debited from client block. In case of insufficient client block, the same shall devolve on clearing member. 4.7.2.5. In case of any devolvement on member, the short amount of client shall be maintained and in case any blocking is done in future, the block shall be debited to the extent of shortfall and provided to the clearing member. 4.7.3. Shortfall: Derivatives 4.7.3.1. CC shall debit block to the extent of pay-in requirements, irrespective of whether such debit causes a margin shortfall. In exceptional circumstances, if pay-in exceeds the margin, the residual amount shall devolve on CM. 4.7.3.2. In case of margin shortfall, TM/CM can close-out the position of the client and resultant loss shall be debited to the block or resultant profit shall be paid out to the client by the CC. Till the time TM/CM closes-out the position, the provisions related to deemed allocation of proprietary collateral shall apply. 4.7.3.3. In case obligations have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 100, the margin collection requirement is Rs. 20 which is blocked from client s allocation. Collateral is released after the member completes the net settlement with the CC. Client creates a block of Rs. 150 in favour of the CC. The amount shall get allocated as collateral. The client purchases a share worth Rs. 100. The margin requirement is 20, this shall get adjusted from the block (which is allocated as collateral). STT and stamp duty shall be 11 paise, which shall be added to the client s obligation. The CC shall debit 100.11 towards settlement at the stipulated time. With the successful debit from the client, the securities receivable by the client shall be provided in the client s depository account directly by the CC at the time of settlement pay-out. Scenario 2: Delivery sale by client by early pay-in Client uses block mechanism for early pay-in of securities. Such early pay-in information is received by the CC from depositories. A sell order is executed on behalf of the client. If sell order is executed aft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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