SEBI’s new rule regarding sale transactions, now it is mandatory to ‘block’ shares in demat accounts – Block mechanism in demat accounts must for share sale transactions from November 14 Sebi

Market regulator SEBI (SEBI) on Friday 19 August issued a new rule regarding share sale transactions. Under this, it will be mandatory for investors to ‘block’ the securities in their demat accounts for such transactions. As of now this facility is optional for the investors.

The Securities and Exchange Board of India (SEBI) said in a circular that the ‘block’ system in the demat account of investors doing share sale transactions will become mandatory from November 14. Explain that the electronic form of shares and securities which is kept in the account is called Demat account.

Under the new system, shares of investors willing to do sale transactions will be blocked in their demat account. This will be done in favor of the Clearing Corporation involved in the transaction.

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Let us tell you that the market regulator SEBI had decided to introduce the ‘block’ system in July. Under this, from August 1, investors would have the option to block securities in their demat accounts for a single sale transaction.

The option of ‘Early Pay-In’ is also available for the investors. Under this option the shares are transferred to the account of the Clearing Corporation linked to the demat account of the subscriber. If the sale transaction is not done under the early pay-in system, those shares are returned to the customer’s demat account. This process takes time and there is a cost involved.

However, SEBI has now, after much conciliation with depositories, clearing corporations and stock exchanges, has decided that the facility of ‘block’ arrangement will be mandatory for all early pay-in transactions.

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