{"id":40254,"date":"2024-10-10T17:43:08","date_gmt":"2024-10-10T12:13:08","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=40254"},"modified":"2024-10-10T17:56:52","modified_gmt":"2024-10-10T12:26:52","slug":"a-seamless-transition-understanding-direct-payouts-in-demat-accounts","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/a-seamless-transition-understanding-direct-payouts-in-demat-accounts\/","title":{"rendered":"A Seamless Transition: Understanding Direct Payouts in Demat Accounts"},"content":{"rendered":"\t\t
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Direct Payout of Securities to Client Demat Accounts <\/strong><\/span><\/p>

Starting from 11 November 2024, shares bought will be directly credited to the customer’s Demat account through net settlement.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Current Process: How Securities Are Credited<\/strong><\/span><\/p>

Under the current system, after investors purchase securities, the Clearing Corporation (CC) first credits these securities to the broker\u2019s pool account. The broker then transfers the securities to the buyer\u2019s demat account. The broker holds control of these securities until the final transfer is made to clients.<\/span><\/p>

In some cases, brokers use a method known as \u201cdirect payout for net settlement,\u201d where securities are matched between buyers and sellers, allowing the CC to credit shares directly to some buyers. However, complexities such as short delivery\u2014when sellers fail to deliver shares\u2014require brokers to resolve these situations through market purchases or auctions.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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New SEBI Guidelines<\/strong><\/span><\/p>

SEBI\u2019s new guidelines will transform this process by enabling the CC to credit securities directly to investors\u2019 demat accounts, removing the intermediary role of brokers in most cases. The changes will occur in two phases:<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Phase 1: November 11, 2024 \u2013 January 13, 2025<\/strong><\/span><\/p>

During this phase, direct credit of securities will be introduced for equity cash segments and physical settlements. However, in certain situations, such as rejected payouts, inactive accounts, or excess securities from clearing members, securities may still be temporarily credited to the broker\u2019s pool account.<\/span><\/p>

The second phase will extend the direct payout system to all security transactions, including Securities Lending and Borrowing (SLB) and Offer for Sale (OFS). At this stage, the broker\u2019s involvement in the settlement process will be minimized, and the Clearing corporation will directly manage auction settlements in cases of short delivery, eliminating the need for brokers to participate in auction processes.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Changes in the Pledge Process<\/strong><\/span><\/p>

Currently, when investors purchase securities using a margin trading facility (MTF) or without full payment, brokers handle the pledging of securities, marking them as pledged until payment is complete.<\/span><\/p>

Under SEBI\u2019s new rules, brokers will no longer manage pledges directly. Instead, if full payment is not made, brokers will instruct the Clearing Corporations to mark the pledge in the client\u2019s demat account, ensuring a more direct and secure transaction process.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What Changes for Investors?<\/strong><\/span><\/p>

For retail investors, nothing changes. The new changes will largely take place behind the scenes and will not require any action on investors\u2019 part. However, the direct credit of securities aims to make the settlement process more efficient, reducing delays and increasing the safety of clients\u2019 securities.<\/span><\/p>

Changes introduced by regulators, such as Segregation of client funds, Block Mechanisms, Pledge Mechanisms, Leverage restrictions in F&O, and Downstream of client funds, have made capital markets much more secure and built trust for investors.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\tOpen Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"Direct Payout of Securities to Client Demat Accounts Starting from 11 November 2024, shares bought will be directly…","protected":false},"author":5,"featured_media":40256,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[1045],"tags":[43,23,84,21],"class_list":{"0":"post-40254","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-demat-account","8":"tag-market-update","9":"tag-stock-market","10":"tag-stocks","11":"tag-trading-account","12":"cs-entry","13":"cs-video-wrap"},"yoast_head":"\nA Seamless Transition: Understanding Direct Payouts in Demat Accounts - 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