At least the qualified stock brokers should be mandated to offer Application Supported by Blocked Amount (ASBA), said the Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch in an event on July 30.
Talking about the delay in making ASBA mandatory for secondary markets, Buch said, "Bahot der ho gayi na?" Buch said that the regulator has given enough time to the market players to adjust, and now Sebi should put up a proposal where the qualified stock brokers at least offer mandatory ASBA for secondary markets.
"Then it is the investors choice to opt for it or not," said Buch during the launch of a report on capital markets in Mumbai.
ASBA in secondary market can potentially unlock up to Rs 2800 crore of annual benefits for investors, in the scenario where all investors shift to ASBA-based trading, said Mukesh Agarwal, CEO of NSE Indices in the event.
A report by NSE on capital markets published the same day said, "This system (ASBA for secondary market) enables direct settlement of funds and securities between investors and clearing corporations and enhances client level visibility at clearing corporation level."
It further said that the ASBA system can potentially mitigate the risks associated with misuse of investor funds by brokers and minimize investor loss in cases of broker defaults. It can also unlock interest income on investors' funds, otherwise remaining with brokers till settlement of the trades.
Sebi on March 29 had given a green signal for ASBA facility for the secondary market. Currently, ASBA is optional for brokers and investors.
An entity would be designated as a qualified stock broker based on the total number of active clients, available total assets of clients with the stock broker, trading volumes of the stock broker, and the end of day margin obligations of all clients of a stock broker.
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