{"id":65707,"date":"2023-04-28T15:41:42","date_gmt":"2023-04-28T10:11:42","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?page_id=65707"},"modified":"2024-05-28T10:50:29","modified_gmt":"2024-05-28T05:20:29","slug":"sebi-issues-circular-in-regard-to-bank-guarantees-bgs-created-out-of-clients-funds","status":"publish","type":"page","link":"https:\/\/enterslice.com\/learning\/newsletter\/sebi-issues-circular-in-regard-to-bank-guarantees-bgs-created-out-of-clients-funds\/","title":{"rendered":"SEBI Issues Circular in Regard to Bank Guarantees (BGs) Created Out of Clients\u2019 Funds"},"content":{"rendered":"<p>On 25th April 2023, the Securities and Exchange Board of India issued a Circular in regard to Bank Guarantees (BGs) Created Out of Clients&rsquo; Funds.<\/p>\n\n\n\n<p>Currently, Stock Brokers (SBs)\/ Clearing Members (CMs) pledge client&rsquo;s funds with Banks which in turn issue Bank Guarantees (BGs) to clearing corporations for higher amounts. This implicit leverage exposes the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> and especially the client&rsquo;s funds to risks. Pursuant to discussions with various stakeholders, it has been decided to implement the following measures in order tosafeguard the interests of the investors &ndash;<\/p>\n\n\n\n<ul>\n<li>Beginning 01st May 2023, no new BGs shall be created out of<\/li>\n\n\n\n<li>clients&rsquo; funds by SBs\/CMs.<\/li>\n\n\n\n<li>Existing BGs created out of clients&rsquo; funds shall be wound down<\/li>\n\n\n\n<li>by 30th September 2023.<\/li>\n<\/ul>\n\n\n\n<p>The provisions of this framework shall not be applicable for proprietary funds of SBs\/CMs in any segment and SB&rsquo;s proprietary funds deposited with CM in the capacity of a client.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On 25th April 2023, the Securities and Exchange Board of India issued a Circular in regard to Bank Guarantees (BGs) Created Out of Clients&rsquo; Funds. Currently, Stock Brokers (SBs)\/ Clearing Members (CMs) pledge client&rsquo;s funds with Banks which in turn issue Bank Guarantees (BGs) to clearing corporations for higher amounts. This implicit leverage exposes the [&hellip;]<\/p>\n","protected":false},"author":60,"featured_media":65728,"parent":62999,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"publication-download.php","meta":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEBI Issues Circular Regarding Bank Guarantees (BGs) Formed Using Clients&#039; Funds<\/title>\n<meta name=\"description\" content=\"The Securities and Exchange Board of Indiaissued a Circular in regard to Bank Guarantees (BGs) Created Out ofClients\u2019 Funds.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/newsletter\/sebi-issues-circular-in-regard-to-bank-guarantees-bgs-created-out-of-clients-funds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SEBI Issues Circular Regarding Bank Guarantees (BGs) Formed Using Clients&#039; Funds\" \/>\n<meta property=\"og:description\" content=\"The Securities and Exchange Board of Indiaissued a Circular in regard to Bank Guarantees (BGs) Created Out ofClients\u2019 Funds.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/newsletter\/sebi-issues-circular-in-regard-to-bank-guarantees-bgs-created-out-of-clients-funds\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"omvir\" \/>\n<meta property=\"article:modified_time\" content=\"2024-05-28T05:20:29+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2023\/04\/SEBI-Issues-Circular-in-Regard-to-Bank-Guarantees-BGs-Created-Out-of-Clients\u2019-Funds-enterslice-blog-images-28-april.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"920\" \/>\n\t<meta property=\"og:image:height\" content=\"483\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/pages\/65707"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/60"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=65707"}],"version-history":[{"count":1,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/pages\/65707\/revisions"}],"predecessor-version":[{"id":86351,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/pages\/65707\/revisions\/86351"}],"up":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/pages\/62999"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/65728"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=65707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}