Sebi launches ASBA-like facility for secondary market to secure investor

With an aim to safeguard investors' money from misuse and default by stock brokers, Sebi on Monday introduced a supplementary process for trading in the secondary market based on blocked funds in an investor's bank account, instead of transferring them upfront to the trading member.

This is similar to Application Supported by Blocked Amount (ASBA)-like facility already available for the primary market which ensures that money from an investor gets moved only when an allotment happens.

The new facility will become live by January 1, 2024, the Securities and Exchange Board of India (Sebi) said in a circular.

Under the framework, funds will remain in the account of client but will be blocked in favour of the Clearing Corporation (CC) till the expiry date of the block mandate or till block is released by the CC, or debit of the block towards obligations arising out of the trading activity of the client, whichever is earlier.

Further, settlement for funds and securities will be done by