- Date : 20/11/2019
- Read: 3 mins
SEBI’s recent circular instructing the mapping of UCC and demat account can go a long way in reconciling client details in trading and removing inconsistencies.
The Securities and Exchange Board of India (SEBI) has laid down a mechanism for the mapping of Unique Client Code with the demat accounts of clients. Stock exchanges and depositories have been asked to map all the existing UCCs with the demat accounts of clients latest by 31 December 2019. The SEBI has further instructed the exchanges to share the UCC related data which includes PAN, segment, TM/CM (clearing member) code and allotted UCC with the depositories. The UCC data will be shared with the depositories by 30 November 2019 and on a daily basis thereafter. The depositories will link the UCC data with the demat account based on the PAN information available in the UCC database.
A client may trade through multiple trading members (TM), in which case there would be multiple UCCs against his or her name. UCCs are allotted by TMs and as a result, each of the allotted UCCs will be linked to one or more of the demat accounts opened.
The clients on their part can request the depository participants to delink or add UCC details which will then be processed by the depository. The addition of UCC in demat accounts will be made by the depositories only after validation by the stock exchanges and the client. The SEBI has instructed the stock exchanges and the depositories to have a mechanism in place to address client complaints regarding this mapping exercise. The mechanism should ensure that inactive and non-operational UCCs are excluded during the mapping process and not misused.
What is a UCC?
UCC is the exclusive identification code of the client engaged in trading. Brokers are mandatorily required to use this UCC. The UCC is linked to the PAN details of the client and it helps the maintenance of a database of the clients and their KYC.
Who is TM/CM?
Trading Member (TM) has a membership that allows the member to execute trading transactions in his own name as well as on behalf of his or her clients. However, a TM cannot clear and settle the trades executed. A CM (Clearing Member) can execute a trade on their own and client’s behalf and also clear and settle trades executed by themselves as well as by other trading members.
Why SEBI wants the mapping of Unique Client Code (UCC) with demat accounts?
The main purpose of the mapping mentioned in the latest SEBI circular was to facilitate the ease of reconciliation. The circular also refers to the Early Warning Mechanism discussed in an earlier circular last year. Diversion of client securities by the stockbroker was cited to be the trigger for this mechanism. The mapping of UCC will be a mitigating step for this diversion as well. Here are some features of a basic demat account you might want to read.