Norms tightened on client collateral for brokers

Written by Markets Bureau | Mumbai, Apr 17 | Updated: Apr 19 2008, 04:57am hrs
The Securities and Exchange Board of India (Sebi) has decided to make it mandatory for brokers to issue daily statements of collateral utilisation to clients.

This will include, among other things, details of collateral deposited by the client (investor), collateral of the client utilised and collateral status (available balance/due from client) with break-up in terms of cash, fixed deposit receipts, bank guarantee and securities. In a circular issued on Thursday, Sebi reiterated the need for brokers to maintain proper records of client collateral. The new changes have been brought in to prevent misuse of client collateral, Sebi said. The move comes in the wake of recent instances of margin calls given by brokers during volatile market sessions, where even some investors maintaining margins more than their requirement had to suffer.