Recovery of assets of defaulter member and recovery of funds from debit balance clients of defaulter member for meeting the obligations of clients / Stock Exchange / Clearing Corporation

Last updated: 30 September 2020

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This circular from SEBI outlines enhanced procedures for recovering assets from defaulting stock exchange members and their clients with debit balances. The aim is to ensure that clients' obligations are met, especially when a defaulter member lacks sufficient funds or securities. Stock Exchanges and Clearing Corporations are now advised to initiate legal proceedings to liquidate both movable and immovable assets of defaulter members and debit balance clients within six months of a default declaration.

Securities and Exchange Board of India CIRCULAR SEBI/HO/MIRSD/DPIEA/CIR/P/2020/186 September 28, 2020 To, All Recognised Stock Exchanges All Recognised Clearing Corporations Madam/Sir, Subject: Recovery of assets of defaulter member and recovery of funds from debit balance clients of defaulter member for meeting the obligations of clients / Stock Exchange / Clearing Corporation 1. SEBI videcircular SEBI/HO/MIRSD/DOP/CIR/P/2018/153 dated December 17, 2018had specified E

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FAQ :

The circular aims to improve the recovery of assets from defaulting members and clients with debit balances to ensure that clients' obligations are met.

They are advised to initiate legal actions to liquidate the movable and immovable assets of defaulter members and debit balance clients within six months of a default declaration.

Clients with a debit balance may have their assets liquidated to the extent of their debit balance to help meet the obligations arising from the member's default.

Stock Exchanges and Clearing Corporations should initiate actions for liquidating assets within six months of a member being declared a defaulter.

They need to make necessary amendments to their bye-laws, rules, and regulations to align with the provisions of this circular.

Stock Exchanges and Clearing Corporations are required to communicate the status of the implementation of this circular to SEBI in their monthly development reports.

Notification No : SEBI/HO/MIRSD/DPIEA/CIR/P/2020/186
Source : https://www.sebi.gov.in/legal/circulars/sep-2020/recovery-of-assets-of-defaulter-member-and-recovery-of-funds-from-debit-balance-clients-of-defaulter-member-for-meeting-the-obligations-of-clients-stock-exchange-clearing-corporation_47695.html

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