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What is ddpi in stock market?

4 Answer(s) Available
Answer # 1 #

DDPI is a document that allows a broker to debit the securities from the client's demat account and deliver them to the exchange. The client doesn't have to enter the CDSL T-PIN and OTP to sell shares once the DDPI is submitted. Earlier, POA was collected for debiting the shares from the client's account.

Fasnokk Panchal
Answer # 2 #

Adani Enterprises Share Price

Reliance Share Price

ITC Share Price

HDFC Bank Share Price

Infosys Share Price

Kamalkar Motwane
Answer # 3 #

Selling stocks without entering CDSL OTP or T-PIN-based e-DIS process is only one of the benefits of opting for DDPI. This is a cumbersome process for many traders to exit their holdings, particularly if you are thinking of automating your investing process using tools like Algomojo.

A Demat debit instruction allows the DP to debit the specified quantity of shares from the investor’s demat account, typically for the purpose of selling them in the stock market. A pledge instruction, on the other hand, allows the investor to pledge their securities as collateral to obtain a loan or credit facility.

In both cases, the investor needs to provide a DDPI to their DP, specifying the quantity and type of securities to be debited or pledged. The DP will then execute the instruction on the investor’s behalf. It’s important to note that debiting or pledging securities without the investor’s authorization is illegal and could result in legal action.

SEBI Circular on Demat Debit and Pledge Instruction (DDPI)

How DDPI is better than POA?

POA stands for Power of Attorney. When an investor opens a demat account with a broker, they are required to provide a POA authorizing the broker to conduct certain transactions on their behalf.

The POA allows the broker to debit shares from the investor’s demat account and sell them in the stock market to fulfill trades initiated by the investor. It also enables the broker to transfer shares from the investor’s demat account to another account, such as when the investor wants to sell the shares to a third party.

However, there have been cases of brokers misusing the POA. In some instances, brokers have used the POA to transfer securities out of an investor’s account without their knowledge or consent or to pledge securities as collateral for loans without informing the investor. This can result in significant financial losses for the investor and can be difficult to rectify.

DDPI is a type of authorization in investing that has specific limitations and purposes. It allows for the debiting of shares only when a user initiates a sell trade and is restricted by the Securities and Exchange Board of India (SEBI) for certain purposes. These include transferring and pledging/re-pledging securities, conducting mutual fund transactions through a Demat account, and tendering shares in an open offer. It’s important to note that effective from November 19th, 2022, DDPI will replace PoA. POA requests updated before 1st Sep 2022, will continue to work as long as the client doesn’t revoke the same

If a client does not provide a POA, they have the option to choose DDPI instead. However, if the client also does not submit DDPI, they will need to submit an electronic delivery instruction slip (E-DIS) each time they make a stock sell transaction. This can become burdensome for the client if they have to submit the E-DIS multiple times.

Sosie Wärn
Length Runner
Answer # 4 #

The Securities and Exchange Board of India (SEBI) issued a circular dated April 4, 2022, stating that the Power of Attorney (PoA) usually granted to stockbrokers and depositories will no longer be allowed from July 1, 2022.

The PoA will, instead, be replaced by a separate Demat, Debit, and Pledge Instruction (DDPI).

According to the SEBI circular – “The DDPI shall serve the same purpose of PoA and significantly mitigate the misuse of PoA”.

The DDPI will be used for two key purposes originally assigned to the PoA as per the PoA Guidelines of 2020. These two functions are – the transfer of securities and the pledging/re-pledging of securities.

This is not to say that the PoAs currently in use will all be nullified. Existing PoAs will remain valid until revoked by the client, and all PoAs going forward will be optional.

The key difference to note between PoAs and DDPIs is that DDPIs can be eStamped & eSigned, while Schedule 1 of the IT Act states that PoAs can’t be digitally executed.

Stockbrokers & depositories are required to obtain permission from investors to conduct transactions on their behalf.

Typically brokers would obtain permission slips for every single transaction, but this is not feasible for brokers and firms with large client bases. Hence brokers have taken to using PoAs as an umbrella solution.

PoAs also needed to be stamped and then signed by both clients and brokers.

With digital execution facilities disallowed for PoAs, brokers and investment firms had to fall back on manual stamp paper procurement.

Stockbrokers & depositories are already familiar with what this entailed.

With the introduction of DDPI, stockbrokers can leverage digital stamping and eSignatures to overcome these challenges and create a smooth document execution journey for investors.

DDPIs will replace PoAs, effective from July 1, 2022, and can be digitally stamped & signed by clients.

According to SEBI’s circular, DDPIs will be considered “Voluntary Documents”, which means that they will be executed only after obtaining the client’s consent.

Here’s what DDPIs will enable stockbrokers to do, after being eStamped & eSigned –

This essentially means that DDPIs allow stockbrokers to handle securities & make transactions on behalf of clients. But without going through the painstaking manual stamping and signing process of PoAs.

SignDesk’s Digital Document Execution solution combines templatization, digital stamping & eSignatures to offer a seamless and complete platform for DDPI execution.

Here’s how stockbrokers can get DDPIs eStamped & eSigned securely & within minutes.

Step 1: DDPI Templatization

We’ve templatized the DDPI form in our template library.

This means that stockbrokers can choose the DDPI template, make several copies, edit the DDPI template as per their requirements, and push DDPIs to execution in bulk.

Step 2: Enter E-Stamping Information

Once the DDPI template is selected, brokers enter E-Stamping information into the SignDesk portal. This includes first & second-party details, stamp state, stamp paper denomination, document type, etc.

SignDesk can also customize our solution to make sure this information is auto-filled.

Step 3: Pay Stamp Duty Online

SignDesk is integrated with SHCIL (Stockholding Corporation of India Ltd) to enable real-time stamp duty payment on instruments.

Stamp duty is debited from the user’s digital wallet and stamp papers are pre-ordered to ensure availability.

To complete E-Stamping, the DDPI is merged with stamp papers, and an index is printed on each stamp paper, with QR codes created to instantly verify the stamping information.

Physical stamp papers are defaced accordingly and delivered to the broker upon request.

SignDesk’s dashboard allows brokers to track stamping status throughout this process.

Step 4: Invite the Client For Signatures

After E-Stamping the DDPI, brokers can invite clients to sign the DDPI via email or SMS. Clients log into SignDesk and preview the DDPI before eSigning.

Step 5: E-Sign DDPI Remotely

Stakeholders can eSign use electronic or Aadhaar eSignatures to sign via OTP, or digital signatures to execute the DDPI.

Step 6: Download Executed DDPI

The eStamped and eSigned DDPI is finally downloaded by all stakeholders. An audit trail is also created for document activities.

Here’s what we know so far.

With this in mind, stockbrokers and investment directories are in one of three possible scenarios.

Scenario 1: No digital infrastructure in place

Technically, DDPIs can still be executed manually. This means following the same execution process as with PoAs – procuring stamp paper from vendors and then getting the DDPI signed with written signatures.

However, this would result in the same challenges and issues as PoAs and a similar degree of inconvenience and friction.

For businesses new to the document automation space, SignDesk offers an eStamp and eSign API that can be easily integrated into any document management system with no third-party assistance.

We also provide onboarding training to help brokers hit the ground running.

Our close working relationship with SHCIL and stamp paper vendors across India enable us to maintain low TATs for stamping and smooth operations. Our eStamp & eSign API is also intuitive to use and has helped several lending groups in large banks streamline their document execution process, reduce expenses and improve customer satisfaction.

Scenario 2: Either E-Sign or E-Stamp integration present

The difference between integrating with just E-Sign or E-Stamp as opposed to both is the same as hopping on one leg versus running on both.

Brokers relying on just one of these solutions will be well aware of the pitfalls that accompany switching to a different platform or even workflow to conduct eStamping or eSigning.

These include delays from having to make adjustments for switching from E-Stamping to written signatures or physical stamping to E-Signatures and efficiency losses due to context switching.

Documents will have to be printed and re-printed, scanned several times, and manually moved between different stakeholders. The document execution process needs to be seamless, both for business efficiency and to boost customer experience.

SignDesk’s combined eSign and eStamp solution is a one-stop platform for digital document execution, enabling brokers to both digitally stamp and sign documents.

Brokers can create DDPIs in bulk, get them all eStamped in one go, and invite multiple signers to eSign every DDPI remotely. Our transparent & audit-ready workflows enable directories and firms to onboard clients securely and quickly.

Scenario 3: Digital Document Execution System already present

Stockbrokers with a strong digital document execution in place are doing something right, but there’s a lot more that needs to be done.

Most digital execution solutions are not fully equipped to handle the transactional, operational, and compliance-related aspects of bulk documentation.

Take it from us, creating a compliant digital stamping solution is tough. This is because of the various stakeholders and laws involved, and the need to collaborate with different regulatory bodies.

It might turn out that the eStamp or eSign service you’re using might not really comply with the IT Act or the various stamping laws at the state level.

With SignDesk you can rest assured that the digital document execution process is fully compliant with all the requisite laws. Our solution has been analyzed by independent legal experts and is currently leveraged by several private and commercial banks.

Stockbrokers will need to create a DDPI for every client onboarded, meaning that the document execution solution used needs to be scalable.

Otherwise, firms and directories will be stuck with the same slow and inefficient investor onboarding process as before and will be unable to grow their operational capacities.

SignDesk offers scalable and customizable document execution solutions built for bulk workflows. Brokers can push documents for eStamping en masse and get them all eStamped at once.

Digital stamping requires robust backend operations to ensure compliance with stamping laws.

Stamp papers need to be procured, checked, defaced, managed, and delivered according to schedule. This requires a strong and flexible team to coordinate the entire process.

Most service providers simply haven’t built up these capabilities or the business relationships required to conduct nationwide eStamping operations.

SignDesk is ISO 9001 certified for operations and boasts considerable operational capabilities, with real-time status tracking, maker-checker principles to ensure accuracy, and strong working relationships with key regulatory bodies such as SHCIL, NSDL, and more.

If your eSign or eStamp provider was rushing to make changes after SEBI’s DDPI circular, you’ll know that they aren’t adaptable.

An indicator of flexible service providers is how quickly they can adapt their solutions to regulation changes and how fast their solutions go live.

At SignDesk, our eSign and eStamping solutions are designed for quick customizations so that simple regulation changes are easy to incorporate. All we had to do was configure a DDPI template and our document execution solution was ready for investor onboarding.

With July 1, 2022, being the last date for stockbrokers and directories to do away with PoA and utilize DDPI, brokers must move quickly to ensure compliance with SEBI’s directives.

Kiran Biren