Defaulting Clients

As per SEBI Circular No. CIR/CDMRD/DEICE/CIR/P/2017/77 dated July 11, 2017, the Exchanges are directed to create a common database of defaulting clients accessible to Members across the Exchanges.

As per the SEBI circular, a client may be identified as defaulter if the client does not pay the award amount to the member as directed in the GRC/ Arbitration/ Appellate Arbitration Order and also does not appeal at the next level of redressal mechanism within the timelines prescribed by SEBI or file an application to Court to set aside such Order in accordance with Section 34 of the Arbitration and Conciliation Act, 1996 (in case aggrieved by Arbitration/ Appellate Award).

Accordingly, the Exchange issued circular no. MCX/ISD/333/2018 dated August 28, 2018, seeking information of defaulting clients as defined above from its Members. Based on the information provided by the members of MCX and other Exchanges regarding the defaulting clients as defined above, a common database across Exchanges have been made available.

As per SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated August 11, 2023 If the challenge is decided against the investor/client, subject to the judgement of the appellate forum, such investor/client should return the released amounts. If the investor/client fails to return the amount released, then the investor/client (based on PAN of the investor/client) shall not be allowed to trade on any of the Stock Exchanges or participate in the Indian Securities Market till such time the investor/client returns the amount to the Market Participant. Further, the securities lying in the demat account(s) or the mutual fund holdings of the investor/client shall be frozen till such time as the investor/client returns the amount to the Market Participant. If security had been obtained, the same could be enforced/realised and adjusted towards the amount required to be returned.