Operational guidelines on Handling of Client’s Unpaid Securities by Trading Members

National Stock Exchange of India Limited, vide Circular Ref. No. NSE/INSP/75508 dated July 31, 2026, has announced an important update regarding Operational Guidelines on Handling of Client’s Unpaid Securities by Trading Members.

Key Details of the Update –
• NSE 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."

• Applicability: The guidelines are applicable to all Trading Members dealing with clients' unpaid securities and prescribe the operational framework for creation, communication, release, invocation, liquidation and extension of Client Unpaid Securities Pledge Account (CUSPA) pledges.

• The guidelines prescribe detailed operational procedures covering:
• Creation of CUSPA pledges for unpaid securities.
• Client communication requirements.
• Policy formulation and disclosure by Trading Members.
• Contents of the 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.
• Restriction on further pledging/re-pledging of CUSPA securities.
• Extension of pledges in exceptional circumstances.

• Effective Date: Operational Guidelines 1 to 9 (corresponding to paragraphs 46.1 to 46.11 of the SEBI Circular) shall come into force from October 31, 2026, while 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 effective.

• Key Changes: The circular operationalizes SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 by prescribing standardized implementation procedures for Trading Members, including CUSPA creation, communication, policy requirements, margin reporting, pledge release, invocation, liquidation and exceptional extension mechanisms.

• Penalty/Consequence: Not Mentioned.

Actions if Any –
• Trading Members intending to hold unpaid securities as CUSPA pledge shall open and maintain the prescribed 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 maintain records of such communications.

• Trading Members shall establish systems and processes for creation, release, invocation, liquidation, reporting and extension of CUSPA pledges in accordance with the prescribed operational guidelines.

• Trading Members shall ensure timely client communications, maintain communication logs, comply with reporting requirements and implement all operational controls prescribed under the circular.

Compliance Deadline –
• October 31, 2026 – Operational Guidelines 1 to 9 become effective, including implementation of 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.