Sebi Proposes Mandate for UPI-Based Trading in Secondary Markets

The Securities and Exchange Board of India (Sebi) has proposed requiring Qualified Stock Brokers (QSBs) to offer UPI-based block trading in the secondary market. Currently optional, this method keeps funds in clients' bank accounts, accruing interest, until trades are executed, enhancing investor protection.

The Securities and Exchange Board of India (Sebi) has proposed that Qualified Stock Brokers (QSBs) must offer their clients the ability to trade in the secondary market using a UPI-based block mechanism, similar to the ASBA facility. This move aims to keep client funds in their bank accounts, accruing interest, until trades are completed.

The current system allows investors to opt-in, but it is not a mandatory service for Trading Members (TMs) to provide. By using the UPI block mechanism, investors can trade based on blocked funds rather than transferring money upfront to the trading member.

In its consultation paper, Sebi emphasized that the UPI block mechanism would be available for cash segments with certain restrictions, while a proposed '3-in-1 trading account' could offer greater flexibility, encompassing both cash and derivatives segments. Sebi is seeking public comments on these proposals until September 12.

(With inputs from agencies.)