Currently Stock Brokers (SBs)/Clearing Members (CMs)pledge client's funds with Banks which in turn issueBank Guarantees(BGs)to clearing corporations for higher amounts. This implicit leverage exposes the market and especially the client's funds to risks. Pursuant to discussions with various stakeholders, it has been decided to implement the following measures in order to safeguard the interests of the investors: -
a.Beginning May 01, 2023, no new BGs shall be created out of clients’ funds by SBs/CMs.
"CIRCULARSEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/061
April 25, 2023
Currently Stock Brokers (SBs)/Clearing Members (CMs)pledge client's funds with Banks which in turn issueBank Guarantees(BGs)to clearing corporations for higher amounts. This implicit leverage exposes the market and especially the client's funds to risks. Pursuant to discussions with various stakeholders, it has been decided to implement the following measures in order to safeguard the interests of the investors: -
a.Beginning May 01, 2023, no new BGs shall be created out of clients’ funds by SBs/CMs.
Also, don't forget to arrange and staple papers properly.