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SEBI has issued a circular today providing standard operating procedure in cases of (potential) default by clearing member / trading member

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In addition to a circular in December 17, 2018 providing early warning mechanisms to prevent diversion of client securities. SEBI has provided additional triggers in cases of TM/CM likely to default in the repayment of funds / securities to its clients and / or fail to meet the settlement obligations to CM / Clearing Corporation:


(1) shortage of funds/securities by more than 10 crore
(2) TM/CM failing to meet settlement obligation
(3) sudden spike in investor complaints regarding non-payment of funds / transfer of securities

SEBI has provided a SOP containing details of minimum action to be taken by Stock Exchanges / Depositories / Clearing Members along with timelines for the action items leaving it open for the Stock Exchanges / Depositories / Clearing Corporations to initiate any other necessary action in accordance with bye-laws / rules / regulations in the interest of investors.

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