SEBI extends power of attorney norms implementation date to August 1

Markets regulator SEBI has extended to August 1, 2020, the date for implementing norms pertaining to power of attorney given by clients to trading members or clearing members.

The regulator had in February 2020 specified guidelines with regard to margin obligations to be given by way of pledge and re-pledge in the depository system. The provisions of the circular were to come into effect from June 1, 2020.

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In a bid to curb the misuse of power of attorney (POA) given by the clients to the trading member (TM) or clearing member (CM), SEBI had prescribed that margin obligations to be given in the form of securities by the client will be by way of pledge or re-pledge in the depository system.

Besides, the title transfer of securities to the client collateral Demat account of the TM/ CM for margin purposes will not be permitted.

In cases where a client has given a POA in favour of a TM / CM, such holding of POA will not be considered as equivalent to the collection of margin by the TM/ CM in respect of securities held in the Demat account of the client with effect from June 1, the regulator had said.

However, amid the situation arising due to COVID-19, the regulator received representations from stockbrokers and broker associations regarding the difficulty in implementing the provisions due to work in progress by market infrastructure institutions.

"...it has been decided to extend the implementation date of the ... provision to August 01, 2020, and align it with the implementation of the mechanism of pledge re-pledge through the Depository system," Sebi said in a circular on Friday.