Rule changes on client fund access have boosted transparency: NSE

Sebi has barred brokers from using one client's collateral to fund another's margins: one of several steps taken to protect investors.

A series of regulatory changes introduced in relation to access to client funds has boosted transparency and improved risk management for the stock market ecosystem, leading bourse National Stock Exchange (NSE) has said.

With effect from May 2, the Securities and Exchange Board of India (Sebi) has barred brokers from using one client’s collateral to fund another’s margins. To enable this, brokers have to segregate and report collateral at client level, failing which they will be slapped with heavy penalties.

In September 2020, the regulator replaced the erstwhile power of attorney (PoA) system with the so-called margin pledge and re-pledge mechanism. The