Market infrastructure institutions (MIIs) have put on hold the direct payout of securities to clients’ demat accounts.

The initial beta phase of the direct pay-out settlement was kickstarted on November 11.

The direct pay-out settlement will be temporarily moved to the erstwhile clearing member pool settlement mechanism effective Tuesday. The interim measure will remain in place until further notice and the revised date will be announced shortly.

“The MIIs are collectively committed to a smooth transition towards a fully optimised direct pay-out settlement mechanism. Certain delays have been observed, and the MIIs are collaboratively working to address these observations seen during the beta phase and ensure stabilisation of the new system,” the MIIs said in a joint release on Tuesday.

“The settlement of shares for Monday are still pending. This impacted volumes on Tuesday. MIIs have to check the capacity and bandwidth before implementing new changes,” said a broker.

Broker’s role

When securities are bought, the Clearing Corporation (CC) first credits them to the broker’s pool account, after which the broker transfers the securities to the buyer’s demat account. Until this transfer is made, the broker holds control of the securities.

Under the new rules, securities will be directly credited to the investor’s demat account, resulting in the reduction of the broker’s role in the clearing process.

These changes were supposed to happen in two phases. In the first phase, the CC will directly credit the securities to an investor’s demat account. The changes will be applicable for equity cash segments and physical settlements. For rejected payouts, inactive demat accounts, or excess pay-in from a clearing member that prevents the completion of the payout, the securities will be credited temporarily to the broker’s account.

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