Similar to blocking a client's funds while applying for an IPO in the primary market, the paper dwells on how this could be applied to the secondary market, whereby client funds are blocked in favour of the clearing corporation, preventing brokers from accessing the funds.
The blocked funds remain in the client's account enabling them to earn interest.
Essentially, the funds will be blocked in favour of the clearing corporation in the client's bank account.
Currently, this can be accessed by the broker and lays it open to misuse in the event of the broker using one client's funds to settle another's obligation.
This story is from the January 18, 2023 edition of Mint Mumbai.
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This story is from the January 18, 2023 edition of Mint Mumbai.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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