IAS Gyan

Daily News Analysis


15th January, 2024 Economy


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Context: SEBI's new norms for the voluntary freezing or blocking of trading accounts aim to safeguard investors from potential fraud and suspicious activities.

Key points and implications

SEBI's Proposal

  • SEBI has mandated that a framework for voluntary freezing or blocking of trading accounts should be laid down by April 1, 2024.
  • The new facility is set to be implemented from July 1, 2024.
  • The Brokers’ Industry Standards Forum (ISF), under the guidance of stock exchanges and in consultation with SEBI, will formulate the guidelines.

Rationale Behind the Proposal

  • Shift to Online Trading: With the stock broking industry moving predominantly online, investors conduct transactions through their trading accounts using login credentials provided by trading members.
  • Addressing Suspicious Activities: SEBI observed that investors sometimes encounter suspicious activities in their trading accounts. However, the majority of trading members lack the facility to freeze or block accounts.
  • Comparable to Other Financial Instruments: The move is seen as addressing the need for a mechanism similar to the one available for blocking ATM cards and credit cards.

What is a Trading Account?

  • A trading account is an investment account that allows retail investors to buy or sell securities in the stock market.
  • It serves as a link between the demat account (where securities are held electronically) and the bank account.
  • Opened with stock broking firms, trading accounts provide access to the trading platform of stock exchanges, enabling the execution of trades on behalf of the account holder.


  • SEBI's initiative aims to enhance investor protection by providing a mechanism for the voluntary freezing or blocking of trading accounts in case of suspicious activities, aligning with the shift towards online trading in India's stock broking industry.

Must Read Articles:

Securities and Exchange Board of India (SEBI):  https://www.iasgyan.in/daily-current-affairs/securities-and-exchange-board-of-india-sebi


Q. What are the key functions and regulatory roles played by the Securities and Exchange Board of India (SEBI) in the Indian financial market, and how does it contribute to the protection of investors and the overall integrity of the securities market?