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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Revised Framework for Upstreaming of clients funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs)

12-Dec-2023 | SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/187

SEBI has issued revised Framework for Upstreaming of clients funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs) in supersession of issued by SEBI in June Circulars. By virtue of this circular a step has been taken by SEBI towards ease of doing business and the revised framework is specified key highlights of which is as mentioned below:- 1. SBs/CMs shall upstream all the clients clear credit balances to CCs on End of Day (EOD) basis. Such upstreaming shall be done only in the form of either cash, lien on Fixed Deposit Receipts (FDRs) created out of clients funds, or pledge of units of Mutual Fund Overnight Schemes (MFOS) created out of clients funds. 2. The nomenclature of all designated client bank account maintained by stock brokers shall be changed to either of the following two categories of bank accounts: a. Up Streaming Client Nodal Bank Account (USCNBA) b. Down Streaming Client Nodal Bank Account (DSCNBA) 3. It is clarified that existing FDRs (created out of clients funds and having tenor of more than one-year) created prior to June 30, 2023 shall be allowed to be grandfathered till maturity. Such FDRs at the time of renewal shall meet the conditions specified at clause 4.B.I of the circular. 4.CCs shall also facilitate a mechanism to adjust the margin blocked in the form of cash, towards client fund pay-in obligations. As CCs are in the process of evolving such a mechanism since issuance of June Circulars, the same shall be made available by January 01, 2024.

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