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

Last updated: 25 June 2021

Save Share

Quick Summary

The Securities and Exchange Board of India (SEBI) has issued new guidelines for the settlement of running accounts of client funds held by Trading Members (TMs). These updated rules, effective from August 1, 2021, aim to mitigate the risk of misuse of client funds. TMs must now settle client funds at least once within a 30 or 90-day gap, depending on client preference. The guidelines also specify how much of a client's funds a TM can retain to cover outstanding obligations and margin liabilities, with a focus on actual fund transfers rather than journal entries.

Securities and Exchange Board of India CIRCULAR SEBI/HO/MIRSD/DOP/P/CIR/2021/577 June 16, 2021 To, All recognized Stock Exchanges Madam / Sir, Sub: Settlement of Running Account of Clients Funds lying with Trading Member (TM) 1. SEBI, videcircular no. MIRSD/SE/Cir-19/2009 dated

Daily Limit Reached

You have reached your daily limit of 2 Free Notice & Circular

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Broadcasts
Daily E-Newsletter
Unlimited Notice & Circular Access

BEST VALUE

2 YEAR PLAN

3,499

(Inclusive of GST)

1 YEAR PLAN

1,999

(Inclusive of GST)

View all CCI PRO benfits

Already a PRO member? Login here for an ad-free experience.

FAQ :

The circular aims to establish a framework to mitigate the risk of misuse of client funds by Trading Members (TMs) and ensures timely settlement of running accounts.

Trading Members must settle the running account of client funds at least once within a gap of 30 or 90 days, based on the client's preference.

No, Trading Members may retain funds to cover pay-in obligations and margin liabilities. They can retain up to 225% of the total margin liability, after adjusting for pledged securities and commodities.

Client funds are considered settled only by making actual payment into the client's bank account, not by journal entries, except for charges.

For clients with a credit balance who haven't transacted in 30 days, the Trading Member must return the credit balance within three working days of the last transaction.

The provisions of this circular are applicable with effect from August 01, 2021.