SEBI Extends Implementation Timeline for Margin Pledge/Re-Pledge Framework Following CDSL & NSDL Representations [Read Circular]

The Securities and Exchange Board of India (SEBI) has extended the timeline for the implementation of ‘margin obligations to be fulfilled through the pledge and re-pledge mechanism in the depository system’.

Originally notified on June 03, 2025, the framework initially marked September 01, 2025 as the date on which it would come into effect. However, SEBI has now extended the available timeline, pushing the effective date to October 10, 2025.

The regulatory body has revised the timeline following formal representations from the two major depositories in India - the Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL). Both entities requested SEBI to grant an extension to facilitate necessary system developments and to ensure system readiness through comprehensive end-to-end testing.

SEBI acknowledged the importance of ensuring a seamless transition and accepted the requests raised by the depositories to prevent any inadvertent disruption to market intermediaries and investors.

The regulator has exercised its powers under Section 11(1) of the SEBI Act, 1992, read with Regulation 30 of the SEBI (Stock Brokers) Regulations, 1992 to issue the circular aimed at protecting investor interests and ensuring orderly development of the securities market.

What are Margin Obligations?

Margin obligations refer to the funds or securities that traders and investors are required to maintain with brokers to cover potential losses that arise from their trades. In order to make this process more transparent and safeguard investor assets, SEBI had mandated that margin obligations should be managed through the pledge and re-pledge mechanism within the depository system only.

This depository system framework ensures that securities provided as margin remain in the investor’s account, with controlled usage by brokers and clearing corporations through structured pledging, curbing misuse and enhancing investor protection.

SEBI has further directed all recognized stock exchanges, clearing corporations and depositories to ensure timely compliance with the extended deadline.

Depositories have been specifically instructed to bring the provisions of this circular to the notice of their members and participants, display the same on their official websites and put in place necessary systems and procedures to comply with the latest update. Depositories have further been advised to make appropriate amendments to their Bye-laws and Rules and Regulations for effective implementation.

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