The Securities and Exchange Board of India (SEBI) recently sent out a circular regarding client fund transfers to all recognized stock exchanges. The circular has specific mandates regarding the settlement of clients' funds currently in their running accounts.
SEBI's new circular, dated 27th of July, 2022, lays down detailed guidelines for settling clients' funds and states that the actual settlement of funds is to be done by the trading member (TM). SEBI also reiterated that there should be a gap of 90 or 30 days between any two settlements made from a running account. Lakshmishree Investment & Securities Pvt Ltd (LISPL) has made administrative changes to comply with the guidelines set forth by the SEBI.
Capital markets regulator SEBI has laid out new guidelines to settle clients’ funds held by stock brokers. These regulations will come into effect from the 1st of October, 2022. The trading member will be required to settle clients’ running accounts of funds. This will need to be done after taking the End of the Day (EOD) obligation of funds on the first Friday of each quarter. The running accounts of clients who have chosen the monthly settlement option will be settled on the first Friday of each month. If such a Friday falls on a trading holiday, settlements will take place on the previous day.
In the parlance of the stock market, a running account settlement refers to stock brokers transferring unused client funds to their respective accounts. Under the new rules, unused funds in clients’ trading accounts will need to be transferred at least once within 30 or 90 days based on client preferences. If a client hasn’t undertaken any transactions within 30 calendar days, funds will be transferred back to the client within three working days. These rules have been put in place to prevent stock brokers from using client funds without authorization.
Under the previous rule, unutilized funds were transferred to the client’s bank account on the 30th day, regardless of when the customer added funds. This gave certain stock brokers ample time to use funds. Now, regardless of when the funds were added to the account, unutilized funds will be transferred on fixed days of each quarter or month, depending on clients’ preferences. While this adds a layer of transparency to the entire mechanism, it also means that all the stockbrokers will have to keep funds ready to transfer back to their clients’ accounts.
The following changes will apply to you as a customer of Lakshmishree Investment & Securities Pvt Ltd:
Lakshmishree Investment & Securities Pvt Ltd (LISPL) has always been at the forefront of government regulations and guidelines compliance. This helps us to bring top-notch trading solutions to our customers without having to worry about non-compliance.
To comply with the new SEBI guidelines, we have made extensive changes to our trading solution.
Please note that the changes will be applicable from the 1st of October, 2022.
Lakshmishree Investment & Securities Pvt Ltd (LISPL) is a next-gen trading solution that complies with all the rules and regulations the SEBI and other regulatory bodies set forth. To ensure that we comply promptly, our team implemented the necessary administrative changes when we received the guidelines from SEBI.
If you have any queries regarding this update or SEBI's new circular, do not hesitate to contact us. Our support team will gladly respond to you and clarify your doubts.
