Sebi Proposes UPI Block Mechanism for Qualified Stock Brokers

Markets regulator Sebi has proposed mandating that qualified stock brokers (QSBs) offer a secondary market trading facility using the UPI block mechanism. A consultation paper also explores the feasibility of a ''3-in-1 trading account facility.'' Public comments on these proposals are invited until September 12.

The Securities and Exchange Board of India (SEBI) has put forth a proposition requiring qualified stock brokers (QSBs) to provide trading facilities in the secondary market through the UPI block mechanism, a system akin to the Application Supported by Blocked Amount (ASBA) facility.

The regulator is also seeking feedback on whether QSBs could offer a ''3-in-1 trading account facility'' as an alternative to making the UPI block mechanism mandatory, according to a consultation paper released on Wednesday.

ASBA allows investors to trade with blocked funds, offering enhanced protection for their assets. The facility ensures that funds are moved only after the allotment process is completed, thereby providing increased security for client funds and securities in the secondary market.

Qualified stock brokers are identified based on parameters such as the scale of operations, number of active clients, total client assets, end-of-day margins, and trading volume.

Public comments on these new proposals and the supplementary UPI mechanism introduced in January 2024 are open until September 12, indicating Sebi's commitment to enhancing the safety and efficiency of trading practices in India.

(With inputs from agencies.)