SEBI mandates linking unique client code to PAN, demat account

The ET has reported that market regulator SEBI has put in place a mechanism for stock exchanges and depositories to map the unique client code (UCC) with the demat account of a client. 
 
UCC is a number that is assigned to each investor and is “unique” in nature. The SEBI direction is aimed at detecting and preventing brokers from illegally diverting securities of investors to make a quick buck. Every investor with a broker is assigned a UCC. However, the same individual will have a different UCC when he opens an account with another broker.
 
SEBI also directed exchanges and depositories to put in place a mechanism to map each UCC with one or more demat accounts.
 
As per a report in ET, SEBI released a circular that mandates Stock exchanges and depositories to map the existing UCCs with the demat account of the clients latest by December 31, 2019. 
SEBI said "UCC allotted by the trading member (TM) to the client shall be mapped with the demat account of the client."
 
SEBI has asked the stock exchanges to share the UCC data having PAN, segment, TM/CM (clearing member) code and the allotted UCC with the depositories. 
 
SEBI said that the UCC data is to be shared with the depositories on a one-time basis by November 30, 2019, and subsequently the incremental data in respect of new UCCs shall be shared on a daily basis.
 
Depositories also need to map the UCC data in the demat account based on the PAN provided in the UCC database.
 
Moreover clients can request their depository participants to delink or add UCC details which will then be processed by the depository through depository participants.
Before any addition of UCC in the demat account, the depositories shall validate the same with the stock exchanges and client.
 
SEBI has also asked exchanges and depositories to have a mechanism in place to address clients' complaints with regard to UCC mapping with their demat accounts.
 
SEBI said "Stock Exchanges and Depositories shall have a mechanism in place to ensure that inactive, non-operational UCCs are not misused and also a mechanism to ensure that inactive, non-operational UCCs are weeded out in the process of mapping clients' UCC with their demat account”.
 
The framework has been put in place following discussions with exchanges and depositories to enable ease in reconciliation.
 
In 2018, SEBI had commenced an early warning mechanism to detect instances of diversion of client’s securities by the stock broker at an early stage to take appropriate preventive measures.

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