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The National Stock Exchange has issued operational guidelines for handling client unpaid securities, following a SEBI circular. Trading Members (TMs) must now manage unpaid securities by creating a pledge in a 'Client Unpaid Securities Pledgee Account' (CUSPA) as part of the clearing corporation's direct pay-out process. TMs are required to establish and publish a policy for handling these securities, communicate pledge details to clients, and perform daily calculations to release excess pledges. TMs are prohibited from providing exposure based on CUSPA-pledged securities or re-pledging them for funding. Provisions for pledge extensions in exceptional circumstances are also defined. These guidelines take effect on October 31, 2026, with specific extension provisions commencing on January 3, 2027.
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Circular
DEPARTMENT: INSPECTION
| Download Ref No: NSE/INSP/75508 | Date: July 31, 2026 |
|---|---|
| Circular Ref. No: 41/2026 |
To All Trading Members,
Sub: Operational guidelines on Handling of Client’s Unpaid Securities by Trading Members
This is with reference to SEBI circular no. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 dated July 03, 2026, on “Handling of Client’s Unpaid Securities by Trading Members”.
In accordance with aforesaid SEBI circular, Operational Guidelines as framed in consultation with SEBI, Depositories and the Brokers’ Industry Standards Forum (“Brokers’ ISF”) are enclosed herewith as Annexure A.
Members are advised to take note of the same and comply.
For and on behalf of National Stock Exchange of India Limited
Naresh Sawana Associate Vice President – Inspection
In case of any clarifications, Members may contact our below offices:
| Regional Office | CONTACT NO. | E MAIL ID |
|---|---|---|
| Ahmedabad (ARO) | 079-65278024/55 | inspectionahm@nse.co.in |
| Chennai (CRO) | 044- 66309915/17 | inspection_cro@nse.co.in |
| Delhi (DRO) | 011-23459146/127/144/147 | delhi_inspection@nse.co.in |
| Kolkata (KRO) | 033- 40400404/06 | inspection_kolkata@nse.co.in |
| Mumbai (WRO) | 022-61928200 | compliance_wro@nse.co.in |
| Central Help Desk | compliance_assistance@nse.co.in |
National Stock Exchange of India Limited
Annexure A
Operational Guidelines for implementation of SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 dated July 03, 2026 on “Handling of Client’s Unpaid Securities by Trading Members”
BACKGROUND
These Operational Guidelines are issued by the Stock Exchanges, in consultation with SEBI, Depositories and the Brokers’ Industry Standards Forum (“Brokers’ ISF”), for implementation of SEBI Circular No. HO/38/11/(9)2026-MIRSD-POD/I/15382/2026 dated July 03, 2026 on “Handling of Client’s Unpaid Securities by Trading Members” (“SEBI Circular”). Unless otherwise specified, the words and expressions used but not defined in these Operational Guidelines shall have the same meaning as assigned to them under the SEBI Circular, the Master Circular for Stock Brokers and other applicable circulars, operational guidelines and instructions issued by SEBI, the Stock Exchanges, Clearing Corporations and Depositories from time to time. These Operational Guidelines shall be read together with the Operational Guidelines and instructions issued by the Clearing Corporations and Depositories in relation to direct pay-out of securities, creation and release of pledge, invocation of pledge, early pay-in and extension of pledge.
The provisions of Operational Guidelines 1 to 9, corresponding to paragraphs 46.1 to 46.11 of the SEBI Circular, shall come into force with effect from October 31,2026 being three months from the date of issuance of these Operational Guidelines. Operational Guideline 10, corresponding to paragraphs 46.12 to 46.14 of the SEBI Circular on Extension of pledge in exceptional circumstances, shall come into force with effect from January 03,2027 in accordance with paragraph 7 of the SEBI Circular. However, aforesaid timeline is not applicable to the provisions in these operational guidelines that are carried over unchanged from the previous guidelines of SEBI/Exchanges/depositories, and such provisions will continue to remain effective and in force.
GUIDELINES
1. Operational Guideline 1 – Creation of Pledge for Unpaid Securities (Paragraph 46.1 of the SEBI Circular)
1.1 For trades not covered under the Margin Trading Facility (“MTF”), the pay-out of unpaid securities, i.e., securities that have not been paid for in full by the client, securities shall be made directly to the client’s demat account followed by an auto-pledge creation request, without any specific instruction from the client, with the reason “unpaid”, in favour of a separate demat account titled “Client Unpaid Securities Pledgee Account (CUSPA)”, opened by the Trading Member (“TM”). (Pledges so created are hereinafter referred to as “CUSPA pledge” in these Guidelines.)
1.2 The CUSPA pledge shall be created as part of the CC direct pay-out process, in accordance with the Operational Guidelines and instructions issued by the Clearing Corporations and Depositories from time to time including uploading of the CUSPA pledge request as a part of the CC direct payout processes.
1.3 For determination of unpaid status of the securities, the end of day clear ledger balance is to be considered. However, any funds out of said end of day clear ledger balance is blocked (used) for existing margin of client, then same may be excluded from end of day clear ledger balance for determination of unpaid status of the securities.
1.4 The TM shall open and maintain the CUSPA demat account in the manner prescribed by the concerned Depository and shall ensure that the account is appropriately tagged, mapped and used only for the purposes permitted under the SEBI Circular and these Operational Guidelines.
1.5 Opening a CUSPA demat account shall be mandatory only for TM who desires to hold securities as CUSPA pledge.
| Question | Answer |
|---|---|
| Client has ₹100 clear credit balance on T day and buys shares worth ₹90 on T day. There are no other positions. Can member request CC for CUSPA pledge marking on these shares to be settled on T+1 as part of payout? | No. The securities are fully paid and cannot be pledged in CUSPA. |
| Client has ₹100 credit on T day but ₹60 is used for margin and purchases shares worth ₹100 on T day. Can member request CC for CUSPA pledge marking on these shares to be settled on T+1 as part of payout? | Yes. Only ₹40 remains freely available, therefore, the securities bought by client are not fully paid and are eligible for CUSPA. |
| Client has ₹60 credit balance on T day and purchases securities worth ₹100 on T day. Can member request CC for CUSPA pledge marking on entire shares worth Rs. 100 to be settled on T+1 as part of payout? | Yes, however, it should be part of Member Risk management Policy that in case of partial payment by client, member can request CC for CUSPA pledge marking on all shares to be received as part of payout. |
| Can CUSPA pledge be initiated in anticipation of future obligations? | No. Only unpaid securities are eligible. |
| Is it mandatory for Prop-only TM to open a CUSPA demat account? | No. A CUSPA demat account is required to be opened only by a Trading Member who desires to hold securities as CUSPA pledge. |
| A TM with client business, but its business model does not result in unpaid securities. Does said TM need to open a CUSPA demat account? | No. A CUSPA demat account is required to be opened only by a TM who desires to hold securities as CUSPA pledge. While it is not a mandatory requirement, member may please note that if a CUSPA demat account is not opened, a CUSPA pledge will not be possible even if member wishes to create one. Hence, member may decide accordingly. |
| Whether Operational guideline 1 (Creation of Pledge for Unpaid Securities) mentioned here is different from Operational Guideline 6 (Release of Excess CUSPA Pledge)? | Yes. Operational guideline 1 provides the guidelines on creation of upcoming CUSPA pledge i.e. when CUSPA Pledge request can be made to CC, manner of creation of CUSPA pledge, and how much CUSPA pledge request can be made to CC. However, operational guideline 6 is applicable post creation of CUSPA pledge which provides the guidelines on maximum value of existing CUSPA pledged shares which can be retained by member on end of day basis and release of excess existing CUSPA pledged shares, if any. |
| Does TM need to open CUSPA account with both depositories? | Trading members need to maintain Client Unpaid Security Pledge Account (CUSPA) in depository where their client has demat account. |
