Operational Guidelines for Handling of Clients' Unpaid Securities by Trading Members

BSE Limited, vide Notice No. 20260731-12 dated July 31, 2026, has announced an important update regarding Operational Guidelines for Handling of Clients' Unpaid Securities by Trading Members.

Key Details of the Update –
• BSE has issued Operational Guidelines, in consultation with SEBI, Depositories and the Brokers’ Industry Standards Forum (Brokers’ ISF), for implementation of SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 dated July 03, 2026 on "Handling of Client’s Unpaid Securities by Trading Members." The detailed guidelines are enclosed as Annexure-1.

Key Details of the Update –
• Applicability: The guidelines are applicable to all Trading Members handling clients' unpaid securities and prescribe the operational framework for creation, communication, release, invocation, liquidation, prohibition on further pledge and extension of Client Unpaid Securities Pledge Account (CUSPA) pledges.

• The Operational Guidelines prescribe detailed procedures covering:
• Creation of CUSPA pledges.
• Client communication requirements.
• Policy formulation, approval and disclosure by Trading Members.
• Contents of the CUSPA policy.
• Margin reporting and prohibition on granting exposure against CUSPA securities.
• Release of excess CUSPA pledges.
• Invocation and liquidation of unpaid securities.
• Auto-release of pledges.
• Prohibition on further pledging/re-pledging of CUSPA securities.
• Extension of pledges in exceptional circumstances based on specified PRCPE codes.

• Effective Date: Operational Guidelines 1 to 9 (corresponding to paragraphs 46.1 to 46.11 of SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026) shall come into force from October 31, 2026. Operational Guideline 10 (paragraphs 46.12 to 46.14) relating to extension of pledge in exceptional circumstances shall become effective from January 03, 2027. Existing unchanged provisions under previous SEBI/Exchange/Depository guidelines shall continue to remain in force.

• Key Changes: The Notice operationalizes SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 by prescribing standardized implementation procedures for Trading Members covering the complete lifecycle of CUSPA pledges, including creation, communication, reporting, release, invocation, liquidation, auto-release and extension.

• Penalty/Consequence: Where an Exchange observes that a pledge extension has been sought or obtained for reasons not permitted under the Operational Guidelines or the SEBI Circular, suitable disciplinary action may be initiated against the Trading Member under the applicable Rules, Bye-laws, Regulations and Exchange Notices.

Actions if Any –
• Trading Members intending to hold unpaid securities as CUSPA pledge shall open and maintain a Client Unpaid Securities Pledge Account (CUSPA) with the concerned Depository.

• Trading Members shall formulate, approve, host on their website and communicate a Policy for Handling Unpaid Securities to applicable clients before implementation of the guidelines and preserve communication logs.

• Trading Members shall establish systems and processes for creation, reporting, release, invocation, liquidation, auto-release and extension of CUSPA pledges in accordance with the Operational Guidelines.

• Trading Members shall ensure timely client communications, maintain records and comply with the operational requirements prescribed under the Notice and Annexure-1.

Compliance Deadline –
• October 31, 2026 – Operational Guidelines 1 to 9 become effective, including implementation of the CUSPA framework and communication of the policy to applicable existing clients.

• January 03, 2027 – Operational Guideline 10 relating to Extension of Pledge in Exceptional Circumstances becomes effective.