**Summary:**
This circular, issued by the Securities and Exchange Board of India (SEBI) on May 29, 2020, pertains to an extension regarding the implementation of a Power of Attorney provision outlined in circular SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020. The initial circular specified guidelines for margin obligations via pledge/re-pledge in the Depository System, slated to take effect on June 1, 2020. SEBI circular SEBI/HO/MIRSD/DOP/CIR/P/2020/88 dated May 25, 2020, reiterated the applicability of paragraph 4 of the February 25, 2020 circular, specifying that holding Power of Attorney by Trading Member/Clearing Member (TM/CM) is not equivalent to margin collection for securities in a client's demat account, effective June 1, 2020. Due to the COVID-19 pandemic, associated lockdowns, and representations from stock brokers and associations citing implementation difficulties, the implementation date for this provision is extended to August 1, 2020. This aligns with the implementation of the pledge/re-pledge mechanism through the Depository system. Stock Exchanges, Clearing Corporations, and Depositories are directed to inform their members/participants and disseminate this information on their websites. This circular is issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Section 19 of the Depositories Act, 1996. D. Rajesh Kumar, General Manager, Market Intermediaries Regulation and Supervision Department, is the contact person.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): Regulatory body for securities markets in India; the issuer of the circular.
Recognised Stock Exchanges: Entities to whom the circular is addressed; stock exchanges recognised by SEBI.
Recognised Clearing Corporations: Entities to whom the circular is addressed; clearing corporations recognised by SEBI.
Depositories: Entities to whom the circular is addressed; organisations holding securities in dematerialized form.
Power of Attorney: The subject of the circular, specifically regarding its use in margin obligations.
SEBIHOMIRSDDOPCIRP202028: SEBI circular number dated February 25, 2020, specifying guidelines regarding margin obligations via pledge/re-pledge in the Depository System.
SEBIHOMIRSDDOPCIRP202088: SEBI circular number dated May 25, 2020, reiterating provisions of the February 25, 2020 circular regarding Power of Attorney.
Depositories Act, 1996: An act of Parliament of India.
CIRCULAR
SEBI/HO/MIRSD/DOP/CIR/P/2020/90 May 29, 2020
To,
1. All Recognised Stock Exchanges
2. All Recognised Clearing Corporations
3. All Depositories
Madam / Sir,
Subject: Implementation of provision regarding Power of Attorney in circular dated
February 25, 2020 – Extension.
1. SEBI, vide circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020,
specified guidelines with regard to Margin obligations to be given by way of Pledge/ Re-
pledge in the Depository System. The provisions of this circular were to come into effect
from June 01, 2020.
2. Vide SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/88 dated May 25, 2020, it was
reiterated that the provision as specified in paragraph 4 of the SEBI circular dated February
25, 2020 regarding holding of Power of Attorney by TM / CM not to be considered as
equivalent to the collection of margin by TM / CM in respect of securities held in the demat
account of the client, shall be applicable from June 01, 2020.
3. However, in view of the situation arising due to Covid-19 pandemic, lockdown imposed by
the Government, representations received from stock brokers and stock broker
associations regarding difficulty in implementing this provision in lockdown situation due
to work in progress by Market Infrastructure Institutions, it has been decided to extend the
implementation date of the aforesaid provision to August 01, 2020 and align it with the
implementation of mechanism of pledge re-pledge through the Depository system.
4. Stock Exchanges, Clearing Corporations and Depositories are directed to bring the
provisions of this circular to the notice of their members / participants and also disseminate
the same on their websites.
5. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities
and Exchange Board of India Act, 1992, and Section 19 of the Depositories Act, 1996 to
protect the interests of investors in securities and to promote the development of, and to
regulate the securities markets.
Yours faithfully
D Rajesh Kumar
General Manager
Market Intermediaries Regulation and Supervision Department
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