SEBI Mulls Direct Payout Of Securities To Client's Account Mandatory; Zerodha's Nithin Kamath Says Move To Simplify Operations Of Stock Brokers

New Delhi: Zerodha’s Co-founder and CEO Nithin Kamath on Friday said that the proposal by the Securities and Exchange Board of India (SEBI) that investors' securities should directly go to their demat accounts, will significantly simplify the DP (depository participant) operations of stock brokers.

In its latest draft circular, SEBI suggested that it should be made mandatory to ensure that stock brokers segregate client's securities so that they are not at risk of being misused.

At present, the clearing corporation first credits payouts into the broker's pool account, which is then credited to the client's demat account.

"Today, when a client buys a stock, it gets credited to the broker pool account, and then the broker credits it to the customer. In the new way proposed, the shares will get directly credited to the customer's demat," Kamath wrote on X social media platform.

He said that even without this regulation, “we're probably the safest financial market in terms of the security of customer assets, given that everything is in the customer's own demat”.

“This regulation will further enhance that”.

A facility of direct delivery to investors has been available on an optional basis since February 1, 2001.

The proposed SEBI framework requires securities to be credited directly to the client's demat account by clearing corporations (CCs).

Additionally, CCs need to provide a mechanism for trading members or clearing members to identify unpaid securities and funded stocks under the margin-trading facility.