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Running Account Settlement is a vital process in the Indian financial market that ensures transparency and protection for traders and investors. It refers to the periodic transfer of unused funds from a trader’s or investor’s trading account back to their registered bank account, as mandated by the Securities and Exchange Board of India (SEBI). This settlement typically occurs on a quarterly or monthly basis, depending on the trader’s preference or regulatory requirements.
SEBI Regulations and the Process:
SEBI has laid down specific guidelines for Running Account Settlement to protect investors’ interests. According to SEBI regulations, brokers are required to settle the funds in a client’s trading account at least once every quarter (90 days) or on a monthly basis if opted for by the client. Read the circular Click here
Here’s how the process works:
Unused Funds Identification: At the end of the settlement period (quarter or month), the broker identifies the funds in the trading account that have not been utilized for trading purposes.
Fund Transfer: The identified funds are then transferred back to the trader’s registered bank account.
Communication: Traders receive notifications from their brokers about the amount being transferred and when the settlement is completed. This process ensures transparency and keeps the trader informed.
Note:
1. Brokers can retain the funds if a client has an outstanding position on the first Friday of the quarter on which settlement is scheduled.
2. If the account is opened after the previous quarterly settlement date, the funds will not be transferred back for the current quarter.