Branch2 Intelligence

SEBI Changes Unpaid Shares Framework, Keeps Securities In Investors' Demat Accounts

IN · 2026-07-03

Key takeaway

SEBI bars brokers from using unpaid shares in clients' demat accounts as collateral for bank/NBFC funding.

Step 1SEBI prohibits brokers from using unpaid shares in client demat accounts as collateral for bank/NBFC funding.
Step 2Brokers lose access to a cheap funding channel, increasing their cost of capital and reducing leverage capacity.
Step 3Banks and NBFCs see a reduction in high-quality collateral, tightening credit availability for broker financing.
Step 4Retail investors benefit from reduced risk of broker default or misappropriation of pledged shares.

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