Margin of safety

ASBA must be properly tested for secondary markets

The Securities and Exchange Board of India (Sebi) has released a consultation paper “Blocking of Funds for Trading in Secondary Market” for public comment on an important change proposed in the funding of secondary-market trades. In essence this seeks to extend the application supported by the blocked amount (ASBA) system, which operates in the primary market, to the secondary market. The objective is to eliminate the need to transfer funds in advance to a broker, and thereby reduce chances of misuse or losses caused by broker defaults. In the primary market, ASBA has been operating smoothly for years. When an