ASBA

ASBA
 

News: Recently, SEBI approved a framework for an Application Supported by a Blocked Amount (ASBA) like facility being made available to investors for secondary market trading.
 

About:
 It is a facility that allows investors to apply for initial public offerings (IPOs) and invest in the stock market without actually transferring the money to the IPO issuer or stockbroker upfront.
 Instead, the investor’s application money is temporarily blocked in their bank account until the shares are allotted to them. This helps investors earn interest on their money while it is blocked and also eliminates the risk of fraud or misappropriation of funds by intermediaries.
 There will be a direct settlement with the clearing corporation (CC), without passing through the 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.