The Securities and Exchange Board of India. File
| Photo Credit: Reuters

To enhance operational efficiency and reduce the risk to clients’ securities, markets regulator SEBI on May 5 decided to make the process of direct payout of such securities to the client’s account mandatory.

This will become effective from October 14, the Securities and Exchange Board of India (SEBI) said in a circular. Currently, the clearing corporation credits the pay-out of securities in the pool account of the broker, who then credits the same to the respective client’s demat accounts. Further, a facility of direct delivery to investors was introduced in February 2001.

After extensive deliberations with the stock exchanges, clearing corporations (CCs) and depositories, SEBI has decided that “the securities for pay-out shall be credited directly to the respective client’s demat account by the CCs”.

Moreover, clearing corporations should provide a mechanism for trading member (TM) or clearing members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.

In case of any shortages “arising due to inter se netting of positions between clients” — internal shortages — SEBI suggested TM or CM should handle such shortages through the process of auction. Moreover, in such cases, the brokers should not levy any charges on the client over and above the charges levied by the clearing corporations.

In May 2023, SEBI specified various processes for handling clients’ securities with regard to pay-in and pay-out of securities. This was to protect clients’ securities and to ensure that the stock broker segregates securities of the client or clients so that they are not vulnerable to misuse.

Eleven funds, under the Qualified Domestic Limited Partner programme, have been launched so far this year. File
| Photo Credit: Reuters

Global fund launches in China have hit a record as a weakening yuan and fragile economy drive demand for foreign assets, in the latest sign of low confidence among domestic investors.

Eleven funds issued under the Qualified Domestic Limited Partner (QDLP) programme have been launched so far this year, according to data by Z-Ben Advisors, already outpacing the full-year number from any previous year.

Managers such as Blackstone, Bridgewater Associates, and Oaktree Capital Management have opened funds, though they did not disclose total fundraising.

The products, which raise money from high net worth and institutional investors and invest in overseas assets, are booming as Chinese markets flounder. The yuan is at six-month lows on the dollar, the stock market shows signs of fatigue after a rebound from 5-year lows struck in February and benchmark 10-year government bond yields have hit record lows.

“Investors’ demand for offshore products have been rising quickly this year due to a weak yuan and sentiment,” said Ivan Shi, head of research at Shanghai-based Z-Ben Advisors, adding alternative investments and foreign bonds are popular.

In April, Blackstone launched its first QDLP fund, channeling money to the firm’s Private Equity Strategies fund.

The initial sales target of $40 million was reached in less than two weeks, according to two people familiar with the matter. Blackstone declined to comment. Market participants say Chinese authorities are largely encouraging the sector and more products are on the way.