NPCI launches UPI-Based System for Secure & Streamlined Secondary Market Trading

The National Payments Corporation of India (NPCI) has initiated a feature similar to Application Supported by Blocked Amount (ASBA) in the secondary market which started on January 1, 2024.

This initiative, initially in its beta testing phase for the equity cash segment, aims to streamline trading processes, elevate security measures, and enhance profitability for investors.

Operating on the UPI platform, this system involves locking a specific amount for multiple debit transactions, enabling seamless stock market trading. The service, in its beta phase, is currently accessible to a select group of pilot customers before a full-scale launch.

During this trial period, investors can reserve funds in their bank accounts, which Clearing Corporations will debit upon trade confirmation during settlement.

Clearing Corporations will promptly process payouts to these clients on a T+1 basis, streamlining the entire process.

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This mechanism allows investors to lock funds in their bank accounts for trading, eliminating the need for upfront transfers to trading members. With a single block limit of Rs 5 lakh, this reserved fund will also serve as collateral for trading, ensuring increased safety of the collateral amount. Through this mechanism, investors’ funds will only leave their bank accounts after trade completion, safeguarding their assets from potential misuse by brokers.

During this initial phase, HDFC Bank and ICICI Bank customers have exclusive access. Axis Bank, YES Bank, and UPI-enabled apps like Paytm and PhonePe are presently in the certification stage, as indicated by NPCI, and are anticipated to soon take part in the beta launch.

Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.