Tightening the grip: Sebi's daily transfer diktat to further pinch brokers

In a new paper, Sebi has proposed the daily transfer of client funds to clearing corporations

The Securities and Exchange Board of India (Sebi) has proposed measures mandating daily upstreaming of all investor funds from stockbrokers to clearing corporations (CCs). The step, aimed at reducing risk on client funds, will further deplete brokers’ revenues as they will lose interest income with transfers being done daily.

At present, stockbrokers convert the surplus funds into bank guarantees (BG) or fixed deposit (FD) receipts which earns them extra income. If the surplus is required to be transferred to CCs daily, stockbrokers stand to lose this income.

In a consultation paper floated last week, Sebi said that investor funds in