Closure of Client Collateral Accounts and Client Margin Trading Securities Accounts maintained by Trading Members
The NCDEX issued a circular (NCDEX/COMPLIANCE-073/2020) on November 9, 2020, regarding the closure of client collateral accounts and client margin trading securities accounts maintained by trading members. This circular drew the attention of members to three other SEBI circulars, namely:
- Circular number SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020
- Circular number SEBI/HO/MIRSD/DOP/CIR/P/2020/88 dated May 25, 2020
- Circular number SEBI/HO/MIRSD/DOP/CIR/P/2020/143 dated July 29, 2020
As per those circulars, which dealt with the subject of ““Margin obligations to be given by
way of Pledge/ Re-pledge in the Depository System,” members were required to close all existing demat accounts that were tagged as ‘Client Margin/Collateral.’ This was to be done by August 31, 2020. In addition to this, members were also prohibited from holding any client securities in any beneficial owner accounts of the members, except in pool account(s) and unpaid securities account(s).
In this regard, the NCDEX noticed that some members had not closed their Client Collateral and Client Margin Trading Securities as the above-mentioned SEBI circulars had directed. In addition to this, members had also not marked them for closure or disabled the standing instructions for credits in such accounts.
So, taking note of this, the NCDEX circular directed all members to close the Client Collateral and Client Margin Trading Securities accounts immediately, in case they had not already been closed. In the case of members who fail to do, the Exchange will issue suitable directions to freeze such accounts for both debits & credits (except corporate actions)
The circular also requested members to note that as per the requirement of SEBI circular numbered SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016, in case of closure of any of the reported demat accounts, the same should be communicated to the Stock Exchanges within one week of such closure.
