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CC/EXT/106- Communication for change in POA clause due to Pledge/Re-Pledge mechanism

Dear All,
In view of the recent developments in relation to SEBI circular dated February 25, 2020, with respect to margin obligations to be given by way of pledge/ re-pledge in the Depository System, Aliceblue Financial Services Private Limited (ABFSPL) is required to adopt the following process:
1. For the purpose of collateral in form of securities as margin, the client will have to pledge securities (by way of OTP authentication) in favor of trading member/clearing member in a specific Demat account namely "Client Securities Margin Pledge Account". The trading member/ clearing member shall subsequently re-pledge the same securities in favor of the Clearing Corporation.
and/or
2. For the purpose margin trading facility, the trading members will have to pledge securities (by way of OTP authentication) in his favor (by way of client authorization) in a specific Demat account namely "Client Securities under Margin Funding Account" for funded securities.
In case of a shortfall, the trading member/ clearing member/ Clearing Corporation (as the case may be) shall have the authority to invoke the pledge for recovery of the outstanding, if any.
3. While SEBI requires the trading member to obtain a separate power of attorney or addendum to the existing power of attorney to authorize pledging and re-pledging of securities by the trading member, in our view obtaining a fresh power of attorney or addendum to the existing power of attorney for this purpose is an administrative challenge given the current COVID-19 scenario. Considering your best interest and with the intent of maintaining business continuity, ABFSPL is sending you this e-mail notification:

  • informing you of the SEBI prescribed process that ABFSPL is required to follow from September 1, 2020, for the purpose of pledging/ re-pledging securities obtained as collateral/margin. Please note that without receipt of OTP authentication from you, ABFSPL shall not be allowed to create/ mark pledge on the relevant securities and re-pledge thereafter This additional security measure has been built to enable you to verify and authenticate creation of pledge on your securities.
  • for you to give authority to Aliceblue Financial Services Private Limited :
    • To create/mark a pledge including margin pledge, re-pledge as permissible under SEBI rules, regulations and circulars on one or more of the Associated Accounts or all or any of the securities lying therein including in the systems of the Depository, as [ABFSPL] may deem fit and to transfer all the said securities to ABFSPL or any account(s) of ABFSPL specified in the schedule hereto or to such other accounts as may be specified on the website of ABFSPL and/or by electronic mail or in accordance with the instructions of ABFSPL;
    • To invoke and/or release of pledge or re-pledge of securities in the Associated Accounts including in the systems of the Depository.
Accordingly, these additional power and authority shall have the effect of amending and modifying the existing power of attorney with effect from September 1, 2020. This e-mail notification shall from the Effective Date be treated as an integral part of and is always to be read in conjunction with the existing power of attorney. All the other powers and authority granted under the existing power of attorney and other provisions thereunder shall continue to be effective, valid, and enforceable.

Please note that if ABFSPL does not receive OTP authentication from your end at the time creation of pledge, SEBI has not permitted the trading member to mark pledge and/ or re-pledge the securities to be considered as collateral and/ or margin and accordingly, ABFSPL will be constraint from executing any instructions received from you where the margin is required including under margin trading facility or in extending margin trading facility to you. Aliceblue Financial Services Private Limited shall not take any instructions from you and because of not acting on instructions, if you suffer any loss then Aliceblue Financial Services Private Limited (ABFSPL) shall not be liable for the said losses.

In case if you have any concerns or queries or require any clarifications, email us at askus@aliceblueindia.com

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