SEBI to Unveil ASBA-like Facility for Secondary Market Trading from Jan-Feb ’24

An Application Supported by Blocked Amount (ASBA)-like facility for trading in the secondary markets will be available from January or February 2024, as per the Securities Exchange Board of India (SEBI). The move is aimed at safeguarding the money of investors from misuse.

In June 2023, the markets regulator announced it would introduce an ASBA-like framework for secondary markets. Such an ASBA-like facility is already available for the primary market, which ensures that an investor’s fund gets moved when only the allotment is completed. Until then, the funds will remain in the bank account of an investor and earn interest.

Now, the facility will be available for the secondary market from January or February 2024. The move could also aid investors to save as much as Rs 3,500 crore annually, as per experts.

As per the framework, funds will remain in the account of the clients but will be blocked in favour of the Clearing Corporation of India Ltd (CCIL) till the block is released by the CCIL or till the block mandate expires, or debit of the block towards obligations arising from the trading activity of the client, whichever occurs first.

In addition, settlement for funds and securities will be undertaken by the CCIL without the necessity for handling client funds and securities by the member.

The markets regulator is ready to unveil same-day settlement of trades on the stock exchanges by March 2024. On the other hand, SEBI is ready to introduce T+0 (T plus zero) settlement trade by the end of the current fiscal.

The markets regulator has already reduced the settlement timelines to as short as one day after the transaction, and now it looks forward to shortening the same even further. Earlier in 2023, the stock markets in the country moved from T+2 to T+1 settlement, this way settling trades on the following business day.

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