Tag Archives: pledge

disclosures on margin obligations

SEBI circular dated 2nd September, 2020 doing away with disclosure obligations in relation to shares encumbered with trading member/ clearing member as a collateral from clients for margin obligations in the ordinary course of stock broking business. Hitherto, disclosures were required to be made under the Takeover Code both at the time of placing the shares for encumbrance and releasing it thereafter. Gist of SEBI circular follows:

  1. Regulation 29 (4) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 (herein after referred as “Takeover Regulations”) provides that for the purposes of disclosure under regulation 29(1) and (2), shares taken by way of encumbrance shall be treated as an acquisition, shares given upon release of encumbrance shall be treated as a disposal, and disclosures shall be made by such
    person accordingly in such form as may be specified.
  2. SEBI vide circular dated February 25, 2020 issued guidelines on acceptance of collateral from clients in the form of securities by Trading Member(TM) / Clearing Member (CM), only by way of ‘margin pledge’, created in the Depository system.
  3. In this regard, considering the representations received and in consultation with market participants, for ease of doing business it has been decided that disclosures specified under Regulation 29(4) of Takeover Regulations, in relation to shares encumbered with TM /CM as a collateral from clients for margin obligation in the ordinary course of stock broking business are dispensed with.

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loan against gold/ jewellery

RBI has vide its circular dated 6th August, 2020 given some leeway to the people suffering from economic crisis due to the covid pandemic by allowing banks to sanction loans against gold ornaments and jewellery upto 90% of the value of the gold ornaments and jewellery. This applies to householders, small businesses and entrepreneurs and the loan should be availed for non agricultural purpose only. The gold ornaments and jewellery should of course be pledged with the bank as a security.

This will give much needed relief to the people and small businesses suffering from immense cash crunch in the economy due to the covid pandemic. Also the gold prices have gone up so that should help the borrowers as well.

Copy of the circular is available here i.e https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11944&Mode=0

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Decisions at SEBI board meeting dated 17th February, 2020

Amendment to SEBI (Depositories and Participants) Regulations, 2018 to enable re-pledge of securities pledged in dematerialized form
The Board approved insertion of a suitable Explanation to Regulation 79 (Manner of
creating pledge in Depository) under SEBI (Depositories and Participants) Regulations, 2018, that the word “pledge” shall include re-pledge of securities for margin and / or settlement obligations of the client or such other purposes as specified by the Board from time to time.

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