UPI Block Mechanism for Secondary Market Trading 

Recently, the Securities and Exchange Board of India (SEBI) proposed Unified Payment Interface (UPI) block mechanism facility for secondary market trading. 

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UPI Block Mechanism 

• UPI Block Mechanism is similar to the Application Supported by Blocked Amount (ASBA), that allows the use of blocked amounts for trading purposes. 
• Integration of UPI Block Mechanism with the secondary market will allow clients to block funds in their accounts specifically for trading in the secondary market. 
• Clients can trade in the secondary market based on the block funds instead of transferring the funds upfront to the trading member. 
• SEBI is also exploring an alternative facility of a 3-in-one trading account, that facilitates a combination of a savings, demat, and trading account.

 

Application Supported by Blocked Amount (ASBA)

• It is a payment method that allows investors to apply public issues by authorizing a Self Credited Syndicate Bank (SCSB) to block funds in their bank account.  

 

About SEBI

• The Securities and Exchange Board of India (SEBI) is a statutory body.
• Functions: To protect the interest of investors in securities, promote and regulate the securities market. 

 

Unified Payments Interface (UPI)

• It is an instant payment system developed by the National Payments Corporation of India (NPCI).
• It powers multiple bank accounts into a single mobile application and facilitates inter bank transactions through mobile phones.