Stock Brokers: Stock brokers will offer UPI-based money blocking or 3-in-1 accounts to investors from February 1.

New Delhi, From February 1, qualified stock brokers will have to provide their clients with facility to trade in secondary market or 3-in-1 trading account facility using UPI-based block mechanism, similar to ASBA facility . , a move that will empower investors. A qualified stockbroker (QSB) must offer one of these two options in addition to your current trading mode.

A 3-in-1 trading account combines a savings account, demat account, and trading account into one integrated solution. In this case, customers hold funds in their bank account and earn interest on their cash balance.

Rahul Jain, CFO, NTT DATA Payment Services India, said, “This initiative will empower and benefit investors through enhanced security, improved transparency, interest yield, ease of payment, etc. at a time of significant growth in UPI payments.” He said.

The move will also improve fund management and further enhance convenience for investors, allowing them to create payment obligations that prevent misuse of funds by blocking trading funds, he added.

The Sebi board on Monday approved a proposal that in addition to the current trading mode, QSBs should provide trading facility backed by blocked amounts from the secondary market (cash segment) using UPI block mechanism (a similar facility to ASBA). 3-in-1 trading account facility with effect from February 1, 2025.

In the UPI block mechanism, customers can trade in the secondary market based on blocked funds in their bank accounts instead of transferring funds up front to trading members. QSB clients can continue using their existing trading facilities by transferring funds to trading members or opt for new facilities. Trading Members (TM) are the number of active customers, the total assets held by customers holding TMs, the intraday margins of all customers, and the trading volume of TMs.

Being designated as a QSB comes with more responsibilities and obligations. QSBs are also subject to enhanced monitoring by the Market Infrastructure Agency.

The markets regulator has introduced the use of the RBI-approved Unified Payments Interface (UPI) with funds blocking facility as a payment mechanism for retail investor applications submitted through intermediaries for public issues such as IPOs from January 2019.

The beta version of trading through the block mechanism for secondary markets was launched on January 1, 2024 for individuals and HUFs and only applied to the cash sector.

Currently, this feature is optional for investors and is not mandatory for trading members to provide services to their clients.