The Securities and Exchange Board of India — the country’s capital market regulator — on Monday extended a timeline for depositories CDSL and NSDL to implement its guidelines related to margin obligations. In June, the capital market regulator had instructed depositories to ensure that all margin obligations in the equity and derivatives segments be fulfilled only through pledges and re-pledges — a step aimed at addressing gaps in the existing process and ensuring greater safety of investors’ securities.
What’s the new deadline?
According to SEBI, the depositories will now have until October 10 to implement system developments and to “ensure system readiness by carrying out end-to-end testing” to meet the guidelines laid out in its June 3 circular.
Originally, the provisions mentioned in the circular were set to come into force from September 1.
ALSO READ: SEBI Annual Report: Fraud cases decline, market scrutiny spikes amid surging insider trading cases—Key takeaways
Why did SEBI move the timeline by more than a month?
Depositories had requested SEBI for an extension of the timeline to prepare for the implementation of its provisions.
The extended timeline is set to enable CDSL and NSDL to ensure smooth implementation, without causing any disruption to the market players and investors.
What do these provisions mandate?
SEBI has mandated that stock exchanges, depositories, and clearing corporations ensure:
- The provisions of this circular are notified to their members and participants, and disseminated on their websites
- Appropriate systems and procedures are in place to ensure compliance
- Relevant bye-laws, rules and regulations are amended accordingly
These provisions, as stated in the June 3 master circular, are aimed at protecting the interests of investors in securities, and promoting the development and regulation of the securities market.
ALSO READ: SEBI proposes definition for algorithmic trading, changes to broker rules | SEBI Proposal: Domestic investors may get access to FPIs in IFSC
