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Market regulator SEBI came out with a set of guidelines for settlement of running account of client’s funds that would be be applicable from August 1, 2021. We will take the look at these rules in this article, but, before that we will understand about pay-in and pay-out of funds.
Pay-in of funds is the amount you are depositing into your FLATTRADE trading account, so that you can buy shares or other securities using that amount. These funds can be transferred through internet banking, UPI, IMPS or cheques.
Pay-out of funds is the transfer of funds from FLATTRADE trading account to your banking account that is linked to your trading account. In case of equity segment, when you sell shares, the proceeds will be paid to your bank account on T+2 days. Whereas, in F&O segment, profit will be paid on T+1 days.
These two processes are important to understand in order to comprehend the settlement of Running Account of client’s funds lying with trading member, in this case, FLATTRADE.
Generally, when you open a trading account with FLATTRADE, a running account authorization is done by default to retain funds. You can give instructions to your broker to retain funds in your trading Account and maintain it as Running Account. This is known as Running Account Authorization. You can give Running Account Authorization for 30 days or 90 days.
SEBI had instructed trading members to transfer available credit balance from your trading account to your bank account, at least once in 90 days or 30 days, depending upon the instruction given by you to your brokerage firms. This process is called settlement of Running Account of client’s funds. The funds are transferred back to the primary bank account linked to your FLATTRADE account.
This settlement of the running account of funds of the client will be done by the trading member after considering the end of the day obligation of funds as on the date of settlement across all the exchanges.
Recently, SEBI has also mandated that all brokers must transfer the funds back to the client’s account within 3 days if you have not traded at all in any of the segments for 30 days in your FLATTRADE trading account. This is despite the client having chosen the 30-day or 90-day settlement cycle.
Once the trading member settles your running account of funds, you will be informed about it through an SMS and email.
To know more about the SEBI’s circular, click here