Can the withdrawals be prohibitted from a demat account

[Tanuj_Pant]

Can there be a scenario where I as a user of a demat account be stopped from withdrawing my investments? I do understand that there can be a case when my investements don’t have liquidity so that I cannot sell them and exit my positions but I am mostly a novice investor so I stick to mostly mutual funds and large cap stocks which I believe have less chance of becoming illiquid.

But my doubt is around my broker being overleveraged on certain aspect at their end and then that affecting my investments, like it happened with a crypto exchange. I do understand that a crypto exchange might be different from a broker managing investments. But what government regulations, if any, covers the broker actions and my actionables if that situation occurs.

This might all be some straight forward stuff or the question might be wrong at some level. Correct me as you see fit. I just wanted to put out my insecurity around this stuff and to learn if there are certain guidelines / frameworks in place for this.

Thanks

[Gnome]

@Tanuj_Pant

I do understand that there can be a case when my investements don’t have liquidity so that I cannot sell them and exit my positions

@Tanuj_Pant

I do understand that a crypto exchange might be different from a broker managing investments.

You understand right.

[Meher_Smaran]

Hi @Tanuj_Pant

You can check this entire thread where @nithin had recently discussed about this in detail

Pledge securities but broker default

@VenuMadhav had written this post when the new pledge-repledge system started. In the new pledge system, the stocks don’t leave the investor’s demat account, instead a pledge is marked in favor of the broker. The broker is required to open a separate demat account labelled ‘TMCM – Client Securities Margin Pledge Account’ for this purpose (TMCM stands for Trading Member Clearing Member). The broker then re-pledges these securities in favour of the Clearing Corporation and obtains margins. S…

If you have any further queries, do share it here

[neha1101]

@Tanuj_Pant

But my doubt is around my broker being overleveraged

@Tanuj_Pant

I just wanted to put out my insecurity around this stuff and to learn if there are certain guidelines / frameworks in place for this.

By being with your current broker whom you are uncomfortable with for whatever reason, how much savings do you really make, in case, you move to one of the established brokers. Is it substantial savings?
If not why bother about small change when what you need is peace of mind. Not that big brokers are saints.

You should be worrying about how your investments is doing rather than worry about your brokers. Just move out. Not worth the savings you are making.

Disc: These are my personal views. I personally prefer reputed brokers and will never go for discounted commission or fees etc with my hard earned capital. Again I am an investor and not a Trader and hence commission the broker takes is not that relevant.

Regarding overleveraging of your broker- I am sure you get tired after analyzing the financials of stocks you have invested every quarter- now you have an additional worry about analyzing the broker balance sheet - that is too much.