Update on Settlement of Running Account of Client’s Funds with Trading Member (TM)

May 18, 2023

To ensure the protection of investor interests, SEBI had previously mandated the settlement of running accounts of client funds on the first Friday of every quarter/month. This directive was integrated into clause 47 of the “Master Circular on Stock Brokers” released on May 17, 2023.

Key Changes

Feedback from Industry: The Broker’s Industry Standards Forum (ISF) highlighted challenges arising from a single-day settlement, such as increased chances of errors, difficulties in adhering to bank payment timelines, and other operational issues.

Taking into account the concerns raised by the ISF, SEBI has approved the recommendation to allow TMs to settle client running accounts on both Fridays and Saturdays. This modification aims to streamline processes, support ease of business for stakeholders like stock brokers and banks, and ensure error-free settlements.

Stock Exchanges are hereby directed to collaboratively formulate and release an annual settlement calendar for both quarterly and monthly settlements. And Post the settlement of a client's running account, all associated funds must be retained exclusively within the 'Up Streaming Client Nodal Bank Account'. Under no circumstances should these funds be diverted or utilized for settling running accounts of other clients.

Source:

CIRCULAR SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2023/197 dated December 28, 2023.