After the 2,000 crore scam in Karvi, SEBI is now bringing new rules.
Following the Karvy Stock Broking incident, Sebi has proposed to stop the direct use of funds or units of mutual fund funds held with brokers or clearing corporation members.
The Securities and Exchange Board of India (SEBI) has stated that such cases have arisen where the funds and securities of investors and clients held by them by trading and clearing members use their own or any third party's margin obligations or deals. Has been used to fulfill settlement obligations. Many times these securities were also used to raise debt in lieu of shares.
SEBI strict on investors' protection
Sebi says that similarly when the fund is traded through digital platforms provided by stock brokers, clearing members and mutual fund distributors (MFDs) and investment advisors, misuse of the available investment amount Scope remains SEBI says that in such deals, mutual fund funds do not know where the fund is coming from, as the funds they receive come from the investors' pool account or a separate escrow account. .Also read: Modi government approves Atal Ground Water Scheme, people of these 7 states will benefit
Karvi scam worth Rs 2,000 crores
Sebi has proposed that stock brokers, mutual fund distributors, investment advisors and other platforms will no longer have pooling of funds or mutual fund units for mutual fund transactions, to address such challenges in terms of protecting investors. SEBI has initiated this proposal after the issue of Karvy Stock Broking came to light. In the Karvy Stock Broking case, the broking company has accused its customers of misappropriating securities worth more than Rs 2,000 crore.
Had issued discussion paper
The discussion letter issued by Sebi on Monday in this regard states that the stock markets should put in place a better system in case of a transaction through a stock broker on the platform of an exchange. It should have such arrangement that payment should be received directly from the bank account of the investor to the recognized clearing corporation and in case of payment to the investor, the payment should be made directly to the bank account of the investor from the clearing corporation.
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Similarly, the receipt and sale of mutual fund units will be released directly to the investors account or from the account. There will be no storage of any kind with brokers or mutual fund distributors, investment advisors, from where they continue to transact cash or units.
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First published: December 25, 2019, 8:40 AM IST
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