SEBI Allows TMs to Settle Client Accounts on Fridays and/or Saturdays, Offering Flexibility & Easing Operations

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  • Last Updated on 30 December, 2023

SEBI's trading members

CIRCULAR No. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2023/197, Dated 28-12-2023

The Securities and Exchange Board of India (SEBI) has recently issued a circular (SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2023/197) dated December 28, 2023, addressing the settlement of the running account of client funds with trading members. This circular aims to enhance operational efficiency for stock exchanges while ensuring the protection of investor interests.

SEBI, in 2018, mandated the settlement of running accounts on the first Friday of the quarter/month, incorporated into the “Master Circular on Stock Brokers” on May 17, 2023.

However, Broker’s Industry Standards Forum (ISF) had represented various problems faced by brokers due to single day of settlement viz. hectic activities on the day of settlement leading to chances of errors, missing out on payment timings of banks due to late finalization, delayed instructions, etc.

They have recommended that TMs may be allowed to settle the running account of clients on Friday and/or Saturday to address these operational difficulties

SEBI has decided to accept the recommendation of the Broker’s Industry Standards Forum (ISF) 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.

Further, 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 Jan-Mar 2024 and monthly settlement of January 2024 and all other provisions under Clause 47 of the circular dated May 17, 2023 shall continue to remain applicable.

Click Here To Read The Full Circular

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