SEBI has vide its circular dated 14th June, 2021 slightly modified the settlement of running account of client’s funds lying with the trading member as follows:
5.1. The settlement of running account of funds of the client shall be done by the TM after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the Exchanges, at least once within a gap of 30 /
90 days between two settlements of running account as per the preference of the client.
5.2. In case of client having any outstanding trade position on the day on which settlement of running account of funds is scheduled, a TM may retain funds calculated in the manner specified below:
5.2.1. Entire pay-in obligation of funds outstanding at the end of the day on settlement of running account, of T day & T-1 day.
5.2.2. Margin liability as on the date of settlement of running account, in all segments and additional margins (maximum upto 125% of total margin liability on the day of settlement). The margin liability shall include the end of the day margin requirement excluding the MTM and pay-in obligation, therefore, TM may retain 225% of the total margin liability in all the segments across exchanges. Computation for arriving at retention of excess client funds based on above points would be as under:
^ Excess securities of Rs. 55,000 (i.e. 280000-225000) is not required to be unpledged.
5.2.3. TM will first adjust the value of securities (after applying appropriate haircut) accepted as collateral from the clients by way of ‘margin pledge’ created in the Depository system for the purpose of margin and value of commodities (after applying appropriate haircut) respectively and thereafter TM shall adjust the client funds.
5.2.4. It is clarified that the excess securities (in the form of margin pledge) or any cash equivalent collateral identifiable with the client and deposited with CC, after adjustment of the 225% of margin liability need not be unpledged.
5.3. Client’s running account shall be considered settled only by making actual payment into client’s bank account and not by making any journal entries. Journal entries in client account shall be permitted only for levy / reversal of charges in client’s account.
5.4. For the clients having credit balance, who have not done any transaction in the 30 calendar days since the last transaction, the credit balance shall be returned to the client by TM, within next three working days irrespective of the date when the running account was previously settled.
5.5. In cases where physical payment instrument (cheque or demand draft) is issued by the TM towards the settlement of running account due to failure of electronic payment instructions, the date of realization of physical instrument
into client’s bank account shall be considered as settlement date and not the date of issue of physical instrument.
5.6. Retention of any amount towards administrative / operational difficulties in
settling the accounts of regular trading clients (active clients), shall be
5.7. The Authorized person is not permitted to accept client’s funds and securities. The TM should keep a proper check. Proprietary trading by Authorized person should be permitted only on his own funds and securities and not using any of the client’s fund.
5.8. Once the TM settles the running account of funds of a client, an intimation shall be sent to the client by SMS on mobile number and also by email. The intimation should also include details about the transfer of funds (in case of
electronic transfer – transaction number and date; in case of physical payment instruments – instrument number and date). TM shall send the retention statement along with the statement of running accounts to the clients as per
the existing provisions within 5 working days.
5.9. Client shall bring any dispute on the statement of running account, to the notice of TM within 30 working days from the date of the statement.
This is interesting because my broker sends me margin statement & settlement statement, which i don’t understand heads or tails of it. The whole system is presently opaque and not transparent at all. They should send the information which we lay persons can understand it fully. Never have i got monies settled into my bank account so far. There is something seriously wrong with the system. SEBI should look into it.