The Market Infrastructure Institutions (MII) on Sunday announced the successful implementation of the direct payout settlement mechanism for securities. MII is made up of stock exchange, clearing corporations and deposits. According to PTI news, under this new system, Clearing Corporation will now transfer securities directly to investors’ accounts, which will replace the existing method, in which the broker keeps the securities in a pooled account before giving the client to the client.
Transparency and investor safety is to increase the purpose
According to the news, MII said in a statement that the initiative, which was implemented on 25 February under the guidance of the Securities and Exchange Board of India (SEBI), is to increase the efficiency, transparency and investor security. By ensuring uninterrupted and direct credit of securities in the client’s demat account, this mechanism strengthens market integrity and operating efficiency. However, the Direct-Payout Settlement was initially stopped on November 12 last year after some delay during the initial beta phase.
Settlement process had to improve
The beta phase launched on November 11 last year was to improve the settlement process for investors. MII said that although the new system has been largely successful, some cases were seen in some cases during the beta phase. As a result, it was decided to temporarily transfer direct-paying disposal from November 12, 2024 to the erstwhile clearing member pool settlement mechanism.
The market infrastructure institution is a system that allows investors, issuers and middlemen to trade and deal with transactions. This includes stock exchange, depository and clearing corporations. The Securities and Exchange Board of India (SEBI) controls MII. Examples of MII in India are National Stock Exchange (NSE), Bombay Stock Exchange (BSE), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CSDL).
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