Direct payout of securities: Zerodha's Nithin Kamath says Sebi's proposal simplifies ops
Zerodha's Nithin Kamath on Friday said the market regulator's new proposal to make direct payout of securities, including shares, to clients accounts will simplify the depository operations of stock brokers.
Recently, Sebi, in a consultation paper that is out for public comments, proposed mandatory direct payout of securities to demat accounts — a move that is aimed at ensuring that securities of the clients are not vulnerable to misuse.
Currently, when a client buys stock, it gets credited to the broker pool account, and then the broker credits it to the customer. In the new way proposed, the shares will get directly credited to the customer's demat.
«This consultation paper, if implemented, significantly simplifies the DP operations of stock brokers,» Kamath said.
«Even without this regulation, we are probably the safest financial market in terms of the security of customer assets, given that everything is in the customer's own demat. This regulation will further enhance that,» he added.
The regulator in a discussion paper on Thursday said the Clearing Corporation should directly credit securities for pay-out to the respective client’s demat account.
In 2001, direct payout to client accounts was already facilitated on a voluntary basis.
The discussion paper proposed that clearing corporations should provide a mechanism for brokers to identify the unpaid securities and funded stocks under the margin trading facility.
Funded stocks held by the broker under the margin trading facility should be held only by
