PTI: To curb the misuse of Power of Attorney (PoA) given by clients to stock brokers, capital markets regulator SEBI has widened the scope of the Demat Debit and Pledge Instruction (DDPI) for pledging and repledging of securities for margin purposes.
Mutual fund transactions executed on stock exchange order entry platforms and tendering of shares in open offers through stock exchange platforms will also be covered under the DDPI, SEBI said. The DDPI, which serves the same purpose of PoA, significantly mitigates misuse of PoA.
The guidelines, which will be effective from November 18, also comes against the backdrop of instances of misuse of PoAs. The use of DDPI has two purposes. One is for the transfer of securities held in the client’s beneficial owner account towards stock exchange-related deliveries or settlement obligations arising out of trades executed by such a client.
Two, pledging or repledging securities in favour of the trading member or clearing member for meeting the client’s margin requirements.
A client can use the DDPI or opt to complete the settlement by issuing a physical Delivery Instruction Slip (DIS) or electronic Delivery Instruction Slip (EDIS) themselves. The existing PoAs will be valid till the time client revokes the same.
The stockbroker and depository participant will not directly or indirectly compel the clients to execute the DDPI or deny services to the client if the client refuses to execute the DDPI.