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No restriction on broker’s power of attorney: Sebi

The clarification came after a media report said that the market regulator has discontinued the use of POA.

ETMarkets.com|
Last Updated: May 26, 2020, 09.10 PM IST
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PoA is a document that confers a broker with the right to handle client shares.
New Delhi: Sebi on Tuesday clarified that there is no restriction imposed on the use of Power of Attorney (POA) between the broker and client in the equity markets.

The clarification came after a media report said that the market regulator has discontinued the use of POA.

PoA is a document that confers a broker with the right to handle client shares. The document is collected by brokers when they open demat accounts for their clients.

“Systems are in place where broker using POA transfers client securities as margin into his client’s collateral account and then places these securities with clearing corporation (CC) by way of transfer or creation of pledge towards margin. There is no change caused in conditions of POA. Even after June 1, broker using POA may continue to transfer client securities to his client collateral account towards margin,” Sebi said.

The only difference would be that now the broker would not be able to report all securities lying in the demat account of the client as margin collected.

In order to post securities as margin, these securities even today are required to be moved out of client demat account to collateral account of clearing member (CM) or clearning corporation (CC). Securities lying in the client demat account of client are not counted as margin by CM/CC and no exposure is permitted.
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