Instructs DPs to tighten norms

The Securities and Exchange Board of India (Sebi) has asked the National Securities Depository (NSDL) and the Central Securities Depository (CSDL) to give more emphasis on investor education and has issued a new set of instructions on various issues related to securities transfer.

Under the new rules, the Depository Participants (DP) have been asked to counter-check information on some transactions with the investor if some unusual features are noticed.

The move by the market regulator comes after it received complaints from some investor forums that securities are transferred from the beneficial owner accounts (BO) without proper authorisation of the concerned investor.

The Secondary Market Advisory Committee (SMAC) of Sebi studied this issue and has recommended a few safeguards.

The DPs have also been asked to put in place appropriate checks and balances with reverification of signatures of the investors while processing the slips. Under exceptional circumstances, they would also be cross-checking with the investors.

"The DPs should make mandatory verifications with a BO before acting upon the delivery instruction slip (DIS) especially in case of accounts that have remained inactive for some time i.e. where no debit transaction has taken place for six months continuously or whenever all the ISIN-securities-balances in that account are transferred at a time," the Sebi circular issued by V S Sundaresan said.