The Securities and Exchange Board of India (SEBI) is considering new regulations for stock brokers to improve trading security and convenience. On Wednesday, SEBI proposed that qualified stock brokers (QSBs) must offer a new trading facility using the Unified Payments Interface (UPI) block mechanism. This new system would be similar to the existing Application Supported by Blocked Amount (ASBA) facility used in primary market transactions.
The ASBA facility allows investors to block their funds for a trade but ensures that the money only moves when the transaction is confirmed. This system helps protect investors’ money and securities by preventing premature withdrawals. Currently, using ASBA is optional for trading members, but SEBI’s new proposal aims to make a similar UPI-based facility mandatory for QSBs.
In addition to this proposal, SEBI is also seeking feedback on whether QSBs should be allowed to offer a “3-in-1 trading account facility” as an alternative. This facility would combine trading, savings, and demat accounts into one, simplifying the trading process for investors.
QSBs are stock brokers with significant operational scale, including a large number of active clients, substantial assets, and high trading volumes. These brokers have more responsibilities and obligations compared to other trading members.
Since January 2019, SEBI has allowed the use of UPI for retail investor applications in public issues, providing a secure payment method. In January 2024, a new UPI mechanism was introduced to facilitate secondary market trading by allowing a single block and multiple debits.
SEBI has invited public comments on these proposals, with feedback due by September 12. The changes are aimed at enhancing the safety and efficiency of trading for investors.