Capital markets regulator -- the Securities and Exchange
Board of India (SEBI) has eased norms for the settlement of client funds in
trading accounts that have remained inactive for 30 days. The revised norms
will be effective immediately and are part of the markets watchdog's ongoing
efforts to simplify procedures for market participants while safeguarding
investors' interests. Under the revised guidelines, stock brokers are no longer
required to identify inactive accounts daily and settle them within three
working days. Instead, funds in such accounts will be settled during the
monthly running account settlement cycle notified by stock exchanges in their
annual calendar.
To facilitate ease of doing business as well as to safeguard
the investors' interest, it has been decided to revise the requirement of
mandatory settlement of such clients' funds. Accordingly, it has been decided
that the funds of such clients who have not traded in the last 30 calendar days
shall be settled on the upcoming settlement dates of the monthly running
account settlement cycle as notified by exchanges in the annual calendar issued
by them from time to time.
The revised framework modifies earlier requirements under the regulator's circular for stock brokers issued in August 2024. These changes follow industry feedback highlighting inefficiencies in the daily settlement process for inactive accounts. SEBI noted that if a client resumes trading after the 30-day inactivity period but before the next monthly settlement date, the broker must settle the account as per the client's chosen quarterly or monthly preference for running account settlements. The regulator has directed the stock exchanges to amend their rules and disseminate the updated provisions widely.
Source: Ace Equity
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