SEBI updates the operating account settlement rules

28 Jul 2022 , 08:28 AM

Regulations governing the settlement of running accounts containing client assets held by stockbrokers have been updated by the Securities and Exchange Board of India (SEBI).

Running accounts for clients who selected monthly settlement should be settled on the first Friday of each month. According to Sebi, if the first Friday is a trading holiday, then such settlement shall take place the day before trading.

Brokers are required by law to execute the settlement of funds and securities in accordance with the client’s instructions. They must keep a maximum of 90 or 30 days between two running account settlements, depending on the client’s preference.

The regulator stated that on the first Friday of the quarter, brokers shall settle running accounts of customers’ money after taking into account the end-of-day obligation of funds as on the settlement date across all exchanges.

Beginning on October 1, 2022, the new regulations would take effect.