SEBI has issued a circular introducing stricter compliance norms for the creation and invocation of pledges of securities through the depository system. Lenders are now required to provide a clear undertaking to give “reasonable notice” to borrowers before invoking or selling pledged securities, aligning depository practices with the Indian Contract Act, 1872. The circular also mandates a standardized pledge request format and requires depositories to issue immediate notifications to both pledgor and pledgee upon invocation. These measures aim to prevent arbitrary sale of pledged shares, especially during market volatility, and enhance transparency and investor protection.