stock brokers From February 1, they will have to allow their customers to use UPI (Unified Payment Interface) based ‘block’ mechanism for buying and selling of shares or they will offer 3 facilities in one trading account. This step will strengthen and empower the position of investors. Eligible Stock Brokers (QSBs) must offer one of these two options, in addition to the existing mode of trading. Savings account, demat account and trading account are combined under three facilities in a business account. In this case, customers will have their funds in their bank account and will earn interest on the balance.
There will be no need to pay money in advance
The UPI based block system will be like SBA (Application Supported by Blocked Amounts). In the UPI block system, merchants will not need to pay money to the broker in advance. They can trade in the secondary market based on the funds blocked in their bank accounts. Clients of eligible stock brokers will have the option to either continue the existing trading facility by transferring funds to trading members or opt for the new facility. Trading members are classified as eligible stock brokers on the basis of size and scale of operations.
Convenience will increase for investors
Rahul Jain, Chief Financial Officer, NTT DATA Payment Services India, said, at a time when UPI payments are seeing significant growth, this initiative empowers and benefits investors with better transparency, interest income and ease of payments along with stronger security. Will do. Additionally, the move will improve fund management and increase convenience for investors, he said. This will allow them to allow businesses to make payments by ‘blocking’ funds into the account which will protect their funds from misuse. The Board of Directors of SEBI had approved this proposal on Monday. Under this, from February 1 next year, eligible stock brokers will either have to allow their clients to use the UPI-based ‘block’ mechanism in the secondary market (cash segment) or they will have to offer three facilities in one trading account.
This facility is optional for investors
Market regulator SEBI had, from January 2019, introduced the facility of blocking funds in the account itself as a payment mechanism for applications of retail investors submitted through intermediaries for public issues like IPOs. Under this, the use of UPI approved by RBI was started. The beta version for buying and selling of shares through ‘block’ mechanism was launched on January 1, 2024 for individuals and Hindu Undivided Families (HUFs) and was implemented only on the cash segment. Currently, this feature is optional for investors.