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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Settlement of Running Account of Client's Funds lying with Trading Member (TM)

28-Dec-2023 | SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2023/197

SEBI has issued Circular on Settlement of Running Account of Client's Funds lying with Trading Member (TM).

By virtue of this circular SEBI has decided to accept the recommendation to settle the running account of clients on Friday and/or Saturday, which streamlines the
process of settlement and ensures ease of doing business for various stakeholders viz. stock brokers and banks, while at the same time safeguarding the interests of the investors by ensuring error free settlement.

Prior to this SEBI had mandated settlement of running account of client's funds on first Friday of the quarter/month.

Through this circular following clauses of Master Circular on Stock Brokers stands modified as under:-

In clause 47.1.1 The TM, after considering the End of the Day (EOD) obligation of funds across all the Exchanges, shall settle the running accounts at the choice of the clients on quarterly and monthly basis, on the dates stipulated by the Stock Exchanges.''

Clause 47.1.2 is modified as follows:

''Stock exchanges shall, jointly, issue the annual calendar for the settlement of running account (quarterly and monthly) at the beginning of the financial year.''

Further, to safeguard against any possibility of misuse of one client's funds to settle another clients' running account, it is stipulated that any funds received
from clients shall remain in the upstreaming account. To incorporate this safeguard, clause 47.1.3 is inserted as follows:

'' TM shall ensure that funds, if any, received from clients, whose running account has been settled, remain in the Up Streaming Client Nodal Bank Account and no such funds shall be used for settlement of running account of other clients. Stock Exchanges shall evolve a monitoring mechanism for this purpose.

The provisions of this circular shall be applicable with effect from the quarterly settlement of January-March 2024 and monthly settlement of January 2024.

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