Sebi approves ASBA like facility for trading in secondary market

Sebi approved a framework for Application Supported by Blocked Amount (ASBA) like facility being made available to investors for secondary market trading.

ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an initial public offering (IPO).

Sebi said under the framework client will continue to earn interest on his blocked funds in his savings account till the time amount is debited. There will be a direct settlement with clearing corporation (CC), without passing through pool accounts of the intermediaries, thereby providing client level settlement visibility to CC and thus avoiding the risk of co-mingling of clients’ funds and securities.

The Sebi board introduced an alternative route to enable a diverse set of entities to become sponsors of mutual fund (MF).

“Such entities, who otherwise may not have been eligible to be sponsors, include private equity funds, with requisite safeguards included in the proposal,” the market regulator said.