Over Rs 500 cr of unclaimed investor assets with stock brokers, SEBI suggests new framework

The existing framework includes making efforts to trace the clients, keeping an audit trail for such efforts, upstreaming client funds to clearing corporations (CCs) on an end-of-day basis and settling accounts immediately to the right person when claims are made.

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In the suggested framework, stock exchanges have to ensure compliance by TMs, and TMs are required to reach out to related parties of the client (such as introducer of the client/nominee of the client/employee of the client/any others) to trade the whereabouts of the client without revealing financial details, among other things.

TMs are also required to select of the stock exchanges having nation-wide terminals as designated stock exchange (DSE) to transfer the unclaimed assets.

The revised framework also covers scenarios where the TM has surrendered the membership or has been expelled or been declared a defaulter.

Under the proposed framework, the unclaimed funds will be transferred to the CCs after 30 days and to the DSE after a year. If the funds remain unclaimed for three years, they will be transferred to the Investor Protection Funds (IPF) and the investor can file claims if his/her claim is more than Rs 100.

Under this framework, unclaimed securities after seven days will be pledged by the TMs in favour of a dedicated demat account of the DSE on a weekly basis within three working days from the end of every week.