SEBI Mulls Revising Settlement of Client Fund Accounts on Monthly Basis
Moneylife Digital Team 05 December 2024
Market regulator Securities and Exchange Board of India (SEBI) proposed running account settlement under which funds of clients who have not done any transaction in the previous 30 days will be settled by stockbrokers on the upcoming settlement dates of the monthly running account settlement cycle. 
 
Under the rule, if a client has not done any transaction in the previous 30 days and has a credit balance, the stockbroker is required to return the fund to the client within three working days, known as running account settlement or quarterly settlement.
 
To facilitate ease of doing business and safeguard investors' interest, SEBI, in its consultation paper, proposed revising the requirement for the mandatory settlement of such clients' funds. 
 
In this regard, the market regulator says a representation has been made by the Brokers' Industry Standards Forum (Brokers' ISF) that the mandated requirement of settlement necessitates the trading member (TM) to identify such clients daily, potentially leading to the daily settlement of client funds and resulting in procedural inefficiencies. 
 
"Further, in the light of the up-streaming framework by which client funds are anyway upstreamed to the clearing corporation (CC), the risk of misuse of clients' funds by the TM has been mitigated. Hence, with a view to facilitating ease of doing business as well as safeguarding the investors' interest, it is being proposed that the funds of such clients who have not traded in the last 30 calendar days shall be settled on the upcoming settlement dates of monthly running account settlement cycle as notified by exchanges in the annual calendar issued by them from time to time," SEBI added.
 
SEBI asked interested parties to submit their comments or suggestions latest by 26 December 2024, through this link with the subject: 'Public comments on Draft Circular - Measure for ease of doing business – Settlement of Account of Clients who have not traded in the last 30 days'.
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