Recently, Securities and Exchange Board of India (SEBI)has proposed mandatory Unified Payments Interface (UPI)block mechanism facility for secondary market trading using UPI-based block mechanism for its clients.
About Unified Payments Interface (UPI) Block Mechanism
This is similar to the Application Supported by Blocked Amount (ASBA)feature which allows trading with a blocked amount.
In the primary market, this feature ensures that the investor’s money is transferred only when the allotment is completed.
In the UPI block mechanism, customers can trade in the secondary market based on funds blocked in their bank accounts, instead of transferring funds to the trading member in advance.
This feature is currently optional for investors, and is not mandatory for Trading Members (TM) to offer as a service to clients.
Importance: It provides better security to customer’s funds and securities.
