Sebi proposes mandatory UPI block mechanism facility for secondary mkt trading
secondary market using the UPI-based block mechanism to their clients, similar to the ASBA facility. In the UPI block mechanism, clients can trade in the secondary market based on blocked funds in their bank accounts, instead of transferring the funds upfront to the trading member.
The facility is currently optional for investors, and not mandatory for Trading Members (TMs) to offer as a service to clients.
Application Supported by Blocked Amount (ASBA)-like facility already available for the primary market which ensures that money from an investor gets moved only when an allotment happens.
In its consultation paper on Wednesday, Sebi has suggested that QSBs must provide the facility of trading using the UPI block mechanism in the cash segment for their clients — individuals and HUFs — with an appropriate glide path for implementation.
Also, it has been suggested that QSBs can offer a «3-in-1 trading account facility» as an alternative to making the ASBA-like facility mandatory.
In the case of 3-in-1 trading accounts, the clients would have their funds in their bank account, earning interest on the cash balances.
In addition, the 3-in-1 facility would be available for cash as well as derivatives segment, without any amount restrictions, while the facility of trading using the UPI block mechanism at present shall be available only for cash segment with some restrictions on number of blocks allowed on a daily basis, Sebi said.
«However, compared to UPI facility, the facility of 3-in-1 trading accounts provide
