Markets regulator SEBI decides on having early warning mechanism to curb diversion of client securities
According to the regulator, there have been instances where stock brokers had diverted clients' securities received as collaterals towards margin or settlement obligations, for raising loan against shares on their own account and for meeting securities shortages in settlement obligations on its own account.
The threshold for such early warning signals would be decided by the stock exchanges, depositories and clearing corporations with mutual consultation, as per the circular. Image source: Reuters