Sebi's move to tighten share pledging norms will improve customer security

The new rule requiring brokers to sell shares if they are not paid for in five days will make margin trading less attractive

Many stockbrokers like Amrapali Aadya Trading & Investment, Kassa Finvest, Unicon and F6 Finserve have defaulted over the past couple of years, resulting in losses to their clients. Many of these defaulters had misused their clients’ shares and funds that were lying with them. The Securities and Exchange Board of India (Sebi) on June 20 came up with a circular aimed at curbing such malpractices. 

The circular reiterates that stockbrokers must segregate the securities and money of clients from their own and that of other clients. “Segregation of funds and securities will allow for better supervision by the exchanges and