In a significant update to its earlier circular dated June 3, 2025, the Securities and Exchange Board of India (SEBI) has announced an extension of the implementation timeline for the new framework on margin obligations through the pledge/re-pledge mechanism in the depository system. The revised deadline for compliance is now October 10, 2025, giving market participants more time to ensure full system readiness.
This move comes after SEBI received formal representations from the country’s two major depositories, CDSL and NSDL, requesting additional time to complete system developments and conduct thorough end-to-end testing.
Background: What the Circular Is About
The original circular issued on June 3, 2025, mandated that all margin obligations related to trading in the securities market—such as in equity derivatives or other leveraged positions—must be fulfilled only through the pledge and re-pledge system in the depository infrastructure. This mechanism ensures better tracking, transparency, and safety of investor securities, reducing the risk of misuse by intermediaries.
Under this framework:
- Investors’ securities are pledged directly in their demat accounts.
- Brokers and clearing corporations can re-pledge these securities further to meet margin requirements.
- Ownership remains with the investor, offering improved protection.
- The system aims to eliminate the older practice of “power of attorney (PoA)”-based transfers, which had raised investor protection concerns in the past.
Why the Extension?
While the regulatory intent is clear and well-received, both CDSL and NSDL have indicated the need for more time to:
- Complete system development and integrations.
- Conduct extensive testing across market participants.
- Prevent any disruptions to trading and clearing activities.
Recognizing the need for a smooth and disruption-free transition, SEBI has extended the original implementation date from September 1, 2025, to October 10, 2025.
What’s Expected from Market Infrastructure Institutions
SEBI has issued clear directives to stock exchanges, clearing corporations, and depositories:
- Disseminate the circular to all members and participants and make it available on their respective websites.
- Establish appropriate systems and processes to ensure full compliance by the revised deadline.
- Amend relevant Bye-laws, Rules, and Regulations to reflect this change.
This circular has been issued under the authority granted by Section 11(1) of the SEBI Act, 1992, and Regulation 30 of the SEBI (Stock Brokers) Regulations, 1992, in pursuit of SEBI’s core objectives—investor protection, market regulation, and development.
Investor Impact
For investors, this move means:
- Continued assurance that their securities remain safe under their ownership.
- A transparent and traceable margin system.
- Additional time for brokers and DPs to upgrade their systems and educate clients on the new processes.
Conclusion
SEBI’s decision to extend the implementation deadline is both pragmatic and investor-friendly. It highlights the regulator’s commitment to safeguarding market stability while enforcing essential reforms. Investors and intermediaries alike are encouraged to stay updated through official sources like www.sebi.gov.in.