SEBI · Market Structure · Medium
SEBI tightens rules on client unpaid securities with auto-pledge and CUSPA account
New rules require brokers to transfer unpaid securities directly to client demat, auto-pledge via CUSPA, and cap payment period at 5 trading days.
What changed
- SEBI revised Paragraph 46 of Master Circular for Stock Brokers, introducing mandatory auto-pledge via new CUSPA account.
- TMs must pay out unpaid securities to client demat accounts and create auto-pledge in favor of CUSPA.
- Clients have up to 5 trading days to pay; TMs must daily monitor pledge value and release excess.
The read
SEBI just rewrote the rulebook on unpaid securities. The old system let brokers hold on to unpaid shares; now pay-out must go straight to the client's demat, with an auto-pledge to a new CUSPA account. The broker gets security, but the client gets the shares. A 5-day payment cap keeps the process moving, and daily monitoring of pledge values adds compliance load. Brokers must set up the account, draft a policy, and send alerts. This changes a fundamental workflow.
Trading MembersClient Unpaid Securities Pledgee Account (CUSPA)Brokers' Industry Standards Forum (ISF)
Primary source: official circular (PDF)