In a recent incident, a 53-year-old man from Pune and his brother fell victim to an online share trading scam.
They were added to a WhatsApp group where they were promised significant profits in share trading. However, they ended up losing approximately two and a half crore rupees due to this scam.
SEBI’s Response and New Regulations
SEBI’s Efforts to Prevent Fraud
To prevent such incidents and safeguard investors, SEBI is introducing significant changes to the stock market trading system.
Implementation Date: October 14
As per a report in the Times of India, SEBI will enforce a new rule effective from October 14. This rule aims to enhance investor convenience, reduce risk, and prevent fraud.
Direct Crediting of Shares to Demat Account
Under the new rule, shares purchased by investors will be directly credited to their demat accounts. This is a departure from the current practice where shares are initially deposited with the broker before being transferred to the investor’s demat account.
Elimination of Brokers from the Middle
One significant change in the new system is the removal of brokers from the transaction process. SEBI took this step after learning that brokers sometimes misuse investors’ stocks for other purposes.
Clearing Corporation’s Role
In the revamped system, the clearing corporation will directly credit shares to customers’ demat accounts. This move aims to ensure that investors receive their shares directly, bypassing the involvement of brokers.
Identification of Unpaid Securities
Additionally, the clearing corporation will provide a mechanism for trading members to identify unpaid securities and funded stocks under margin trading services.
Broker’s Rights and Responsibilities
According to SEBI’s circular, if a broker has provided funds for purchasing shares, they can retain those shares as collateral.
In case the investor fails to repay the funds on time, the broker reserves the right to auction off such shares.
