SEBI Floats Consultation Paper To Introduce ASBA Like Facility For Share Trading Also To Save Investors

SEBI Update: SEBI is preparing to take another big decision to reduce the convenience and risk of traders trading in the stock market. In the coming days, you will not need to transfer funds to your broker for trading in shares. Rather the funds required for trading will remain in your bank account and will be blocked. The regulator of the stock market has issued a consultation paper to take suggestions from the stakeholders before implementing this new facility.

No need to transfer funds to the broker!

If SEBI takes such a decision, then the broker will not have to transfer funds to buy shares. Rather the funds will remain lying in your bank account. But the amount you are trading will be blocked in the account. This system will work in the same way as you apply in the IPO of a company. On applying in IPO, the amount gets blocked in the account itself under ASBA (Amount Supported By Blocked Amount). In ASBA, the amount gets blocked in the applicant’s bank account and interest is also earned on this amount.

Will help in preventing misuse of money

SEBI believes that the proposed system will prevent misuse of clients’ money, traders’ capital will be saved from broker’s default. At present, many bank based brokers provide the facility of 3-in-1 accounts to the customers, in which the trader can transfer funds between the bank account and the trading account as and when required. But SEBI believes that even this is not completely safe. Funds may be in the client’s bank account but it is marked in favor of the broker. Due to this there remains a risk of misappropriation of funds by the stock broker.

protect the interests of small investors

Currently, a trader buying and selling shares has to transfer funds to his share trading account which is used as collateral for trading. In fact, SEBI has recently taken several steps to protect the interests of small investors, this is also included in the same episode.

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