SEBI has today proposed discontinuation of pooling of funds by stock brokers, distributors, RIAs while making transaction. This comes after Karvy Stock Broking allegedly misused the pooling accounts of investors to raise loan against pledged shares.
The market regular said that it will ensure that the deposits and redemptions made by the investors through their bank account directly reaches them without any intermediary i.e usage of pooling through escrow account.
About 10 years ago, SEBI had allowed transaction of MF schemes through registered stock exchanges in order to provide a diverse way of transaction.
Data shared by the regulator shows that in the last three years, the amount of transactions made through pool accounts from stock exchanges by brokers were substantially higher than executed by the distributors and RIAs though non-pool accounts.
In 2018-19, the total amount of transactions executed through pool accounts of NSE and BSE collectively stood at Rs.56,676.83 crore and those made through non-pool accounts of both the exchanges stood at Rs.50,593.12 crore.
