The Hindu Business Line : Unique identification number mandatory for margin trading

The guideline issued by the Securities and Exchanges Board of India specifies that the facility is open only to corporates and individuals who have the unique identification number.

It may be recalled that in November 2003, SEBI initiated the creation of a central database of market participants and investors. This database, called MAPIN, would capture among other details, biometric identification details like fingerprints. Under this, every market participants should have a unique identification number.

The database scheme was launched by Mr G N Bajpai, Chairman, SEBI, on November 25 last year

While SEBI expected to register 70,000 participants in the first phase, the actual numbers registered are far lower. As of today, 2,045 corporates and 11,274 individuals have obtained the unique identification number. This also includes the employees of corporates who have obtained the identification number. The intermediaries who are expected to have the identification include bankers, custodians, trustees, investor associations and fund managers, among others.

The guideline issued by SEBI regarding margin trading and securities lending and borrowing, specifies that the broker shall disclose to the stock exchanges details on gross exposure including name of the client, Unique identification number, name of the scrip and if the broker has borrowed funds for the purpose of providing margin trading facility, name of the lender and amount borrowed, on or before 12 noon on the following day.

It is mandatory not just for the broker, but also for the client on whose behalf he is trading to have the unique identification number. "A broker should take adequate care and exercise due diligence before providing margin trading facility to any client. Any broker providing margin trading facility to a client shall ensure that the client has obtained a unique identification number," the guideline clarifies.

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