- The Securities and Exchange Board of India (SEBI) has proposed that Qualified Stock Brokers (QSBs) offer clients the option to trade in the secondary market using a UPI-based block mechanism, similar to the ASBA facility.
- UPI Block Mechanism allows clients to trade based on blocked funds in their bank accounts without transferring money upfront to the trading member.
- The UPI block facility is optional for investors and not mandatory for Trading Members to offer.
- The UPI block mechanism mirrors the ASBA facility in the primary market, where funds are moved only upon allotment.
- QSBs may also offer a ‘3-in-1 trading account facility’ as an alternative to making the ASBA-like facility mandatory.
| Application Supported by Blocked Amount (ASBA) facility • It allows investors to apply for IPOs without transferring funds upfront. • Instead, the application amount is blocked in the investor’s bank account and only debited if shares are allotted. • This ensures that investors retain control over their funds, which continue to earn interest until the allocation. • ASBA provides transparency, reduces the opportunity cost, and is mandatory for all IPO applications, streamlining the process and enhancing security in the primary market. |
Dig Deeper: Read about the Code of Conflict of Interest in the context of SEBI.
