New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    What is the full form of DDPI- a document which is

    replacing Power of Attorney to be givem by the clients to their stock brokers for executing the transactions:
    A Depository Demand Pledge Instruction Correct Answer Incorrect Answer
    B Demand Depository Pledge Instruction Correct Answer Incorrect Answer
    C Demat Debit pledge instruction Correct Answer Incorrect Answer
    D Demat Draft Pledge instruction Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    SEBI issued a circular on April 4, 2022 about Execution of Demat Debit and Pledge Instructions (DDPI) replacing power-of-attorneys that are usually given by investors to stock-brokers and depository participants. From July 1, stockbrokers will not be able to collect PoAs from new clients they onboard. Instead their clients will need execute a document known as a “DDPI”[Note: SEBI has now extended this deadline to September 1, 2022]. Earlier, SEBI allowed stockbrokers to collect a Power of Attorney (“PoA”) from clients/investors. This PoA would authorize stockbrokers to perform key activities on behalf of their clients in the course of day-to-day operations - namely transfer of shares/stocks/securities and pledging/re-pledging of securities.In case clients did not give a PoA, stockbrokers would need to collect an authorization slip each time they wanted to perform a transaction on behalf of a client. Naturally, doing this for every client on a regular basis would be a massive operational nightmare for both stockbrokers and clients.To avoid this, almost all stockbrokers (especially large ones operating digital interfaces) would collect a “Power of Attorney” from their clients. Under the DDPI Circular - SEBI has done away with the Power of Attorney from July 1[Note: SEBI has now extended this deadline to September 1, 2022]. Instead of the Power of Attorney, clients will now need to execute a Demat Debit and Pledge Instruction (DDPI) to authorize stockbrokers to perform transactions on their behalf on a day to day basis. Note: DDPI does not invalidate existing PoAs. Stockbrokers would only need to collect DDPI from new customers that they onboard after September 1. The authorization given by existing customers via PoA would still be valid.

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