Starting October 14, 2024, shares purchased by investors will be directly credited to their demat accounts through a simplified net settlement process, reducing the need for intermediaries in the share transfer process.
What is changing?
In a post on X (formerly known as Twitter), Kamath explained that this measure is designed to improve market security and simplify trading.
“While SEBI, on one hand, is tightening norms to make markets safer, on the other hand, it is also making things simpler,” he said.
While SEBI is tightening rules to make markets safer on the one hand, it is also making things simpler on the other.
Starting October 14, the purchased shares will be directly credited to the client’s Demat account through net settlement. This significantly simplifies our…
-Nithin Kamath (@Nithin0dha) October 8, 2024
The transition to direct equity crediting will eliminate the broker’s ability to handle client securities during the settlement process.
Currently, brokers manage the allocation of shares on a gross settlement basis, which involves receiving shares for a group of clients before distribution.
This change means that brokers will no longer have access to clients’ securities, which will significantly reduce the risks associated with stock trading.
Key implementation phases
The new process will be developed in two phases:
Phase 1 (October 14, 2024 – January 13, 2025): Clearing companies will directly transfer shares to investors’ demat accounts for cash share segments and physical settlements.
However, if there are issues like inactive demat accounts or declined payments, the securities will temporarily reside in the broker’s common account.
Improved availability of sales proceeds
In another development, Zerodha announced that 100% of the sale proceeds will be available for trading immediately after selling the shares, an increase from the previous policy that allowed only 80% to be reused on the same day.
Starting today, 100% of the sale proceeds will be available for trading after you sell your holdings, instead of just 80%.
Previously, only 80% of the sale proceeds were credited, while the remaining 20% was locked for initial margin requirements and available on…
—Zerodha (@zerodhaonline) October 7, 2024
This change allows traders greater flexibility and access to funds.
. However, it is important to note that this policy will not apply to Buy Today, Sell Tomorrow (BTST) trades, where next-day returns can be accessed.
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