Sebi on Wednesday issued a draft circular proposing amendments to its margin pledge system to prevent the possible misuse of clients' securities by brokers. These changes aim to enhance transparency and reduce systemic risks associated with clients' securities. The Securities and Exchange Board of India (Sebi) has invited public comments on the draft circular 'Margin obligations to be given by way of Pledge/re-pledge in the depository system' by March 4. The regulator noted that brokers have not been selling clients' securities invoked under the margin pledge system on the same day, resulting in the accumulation in brokers' demat accounts. This accumulation may lead to a potential misutilisation of clients' securities, prompting the need for regulatory intervention. Under the proposed changes, Sebi intends to introduce a mechanism where clients' securities, upon invocation, will be blocked for early pay-in within the client's demat account. This move will reduce the chances of brok