Ease of Doing Investments by Investors- Facility of voluntary freezing/ blocking of Trading Accounts by Clients

Posted On - 20 February, 2024 • By - King Stubb & Kasiva

SEBI has mandated that the Brokers’ Industry Standards Forum (ISF) develop a framework by April 01, 2024, for Trading Members to offer voluntary freezing/blocking of online trading accounts in case of suspicious activities. This framework will include detailed policy guidelines, actions for Trading Members, and procedures for re-enabling accounts. Stock Exchanges must ensure that these guidelines are implemented by Trading Members starting from July 01, 2024. Some key points are as follows:

  • Transition: Indian stock broking from call and trade to online mode.
  • Lack of Blocking Facility: Majority of Trading Members lack facility for freezing/blocking accounts despite noticing suspicious activities.
  • Proposal: Provide facility for voluntary blocking/freezing of trading accounts, similar to ATM and credit card blocking.
  • Framework Development: Brokers’ Industry Standards Forum (ISF) to develop framework for Trading Members by April 1, 2024, in consultation with stock exchanges and SEBI.
  • Detailed policy to include client request modes, acknowledgment issuance, processing time, action steps, re-enabling process, and client intimation.
  • Implementation: Stock Exchanges to ensure guidelines implementation by Trading Members from July 1, 2024, with compliance report submission to SEBI by August 31, 2024.
  • Stock Exchanges’ Responsibilities:
    • Take necessary steps and implement systems.
    • Amend relevant bye-laws, rules, and regulations.
    • Inform Trading Members and disseminate circular on their websites.
  • Issuance: Circular issued under Section 11(1) SEBI’s authority to protect investor interests and regulate securities markets.