SEBI Circular on : Settlement of Running Account of Client’s Funds lying with Trading Member (TM)
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16-06-2021 |
SEBI |
Settlement of Running Account of Client’s Funds lying with Trading Member (TM) |
Settlement of Running Account |
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Highlights of SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/577 Dated June 16, 2021 on
Settlement of Running Account of Client’s Funds lying with Trading Member (TM)
SEBI has issued revised guidelines on Settlement of Running Account of Client’s Funds lying with Trading Members, in partial modification of SEBI Circulars no. MIRSD/SE/Cir-19/2009 dated December 03, 2009 and no. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016.
The same are as under:
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. 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: a. Entire pay-in obligation of funds outstanding at the end of the day on settlement of running account, of T day & T-1 day b. 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. The Circular also provides computation for arriving at retention of excess client funds based on above points.
# Excess securities of Rs. 55,000 (i.e. 280000-225000) is not required to be unpledged
c. 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. D 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.
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. 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 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. 6. Retention of any amount towards administrative / operational difficulties in settling the accounts of regular trading clients (active clients), shall be discontinued. 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. 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. 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 statements has advised the Members to desist the practice of allotting multiple client codes to a retail single client and also informed that the use of such practice shall be treated violative of the unique client code requirement.
Stock Exchanges shall develop online system for effective monitoring of timely settlement of running account for funds of client and to verify that excess clients’ funds are not retained by the TM as on the date of settlement of running account. The intent of the online system shall be to discourage TM from retaining excess funds of clients after settlement of running account, by considering all the client obligations across exchanges. The responsibility of monitoring settlement of running account compliance of TM may be shared among Stock Exchanges
The provisions of this circular shall be applicable with effect from August 01, 2021. Stock Exchanges shall put in place an appropriate reporting requirement by TM to enforce the above system
SEBI Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/577 Dated June 16, 2021, is enclosed herewith.
In case of any clarification or assistance required in implementation of this circular you may contact VANDANA VANIA (SecMark Consultancy Ltd.)– van...@secmark.in / 9223303460 SHARDUL SHAH - shard...@secmark.in/ 9869265949 / 9653415968 |
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