The Securities and Exchange Board of India – SEBI has proposed a series of changes to the framework governing the handling of clients’ unpaid securities. Aimed at improving ease of doing business while strengthening investor protection, SEBI has suggested providing flexibility to trading members to define a shorter funding period than the current five trading days for clients to meet payment obligations. 

 

The regulator has further proposed that if payment is received before 5 PM, the pledge would be released on the same day, while payments received after the cut-off would lead to release by the next trading day. Introducing provisions for partial release of pledged securities, SEBI has asked trading members to adjust pledge amounts based on daily assessment of client obligations and security values.

 

The regulator has clarified that if a pledge is neither invoked nor released within five trading days after pay-out, it will be automatically released by depositories at the end of the next trading day. Additionally, provisions have been included to allow extension of pledge timelines in exceptional situations such as trading suspension or market constraints.

 

Public comments on this draft circular that outlines changes to the existing “Client Unpaid Securities Pledgee Account” (CUSPA) framework can be submitted till 15th May 2026.