The market regulator has sought public comments on these proposals by September 12.
Market regulator SEBI has proposed to make it mandatory for eligible stock brokers to facilitate transactions in the stock market to their clients using UPI-based block system on the lines of ASBA facility. ASBA (Application Supported by Blocked Amount) is an application process for IPO developed by SEBI. According to Bhasha news, this application is the authorization to block the application amount in the customer’s bank account to take an initial public offering (IPO).
Customer will get this facility
According to the news, under the UPI block system, customers can transact in the stock market based on the amount blocked in their bank accounts. This facility is currently optional for investors and it is not necessary for the firm providing the trading facility to offer it as a service to the customers. The facility of blocking the amount in the account for share allotment is already available for the primary market through ASBA. This ensures that the investor’s money is transferred only when the share is allotted.
Three-in-one trading account facility is available
The Securities and Exchange Board of India (SEBI) has suggested in its consultation paper issued on Wednesday that eligible stock brokers should provide the facility of share trading using the UPI block system in the cash segment for their customers. SEBI has also said that stock brokers can provide a three-in-one trading account facility as an alternative to making a facility like ASBA mandatory. In such accounts, customers will have money in their bank account, which will give them interest on the remaining cash amount. Apart from this, the three-in-one facility will be available for both cash and derivative segments without any amount restriction, while the facility of trading using the UPI block system will be available only for the cash segment for now.
Comments sought on the proposals by September 12
The market regulator has sought public comments on these proposals by September 12. Trading members are classified as qualified stock brokers (QSBs) based on the size and scale of their operations. Being designated as a QSB increases the responsibilities and obligations of stock brokers. The regulator had released the beta version of trading through block mechanism for share trading on January 1 this year. However, it was implemented only on the cash segment. At present, this facility is optional for investors and it is not mandatory for trading members to provide it as a service to customers.
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