This Article is From Oct 30, 2013

Brokers can retain up to Rs 10,000 in active client accounts

Brokers can retain up to Rs 10,000 in active client accounts
Mumbai:

To ensure operational ease in providing services to their clients, brokers have been allowed to retain up to Rs 10,000 in trading accounts of active customers after obtaining their written consent.

As per the existing practice, the brokers were supposed to settle the funds and securities in running accounts of their clients on a quarterly or monthly basis, under which they were required to transfer any excess funds from the client's trading account to his or her bank account.

However, the stock exchanges, in consultation with market watchdog Securities and Exchange Board of India (Sebi), have now decided to ease these norms "based on representations received from investors and members (brokers)".

In separate circulars, BSE and NSE said that "to address the administrative/operational difficulties in settling the accounts of regular trading clients (active clients), the Member may retain an amount of up to Rs 10,000/- (net amount across segment and across stock exchanges), only after obtaining written consent of the client."

However, this threshold limit on retention of amount would not be applicable in case of clients who have not traded even once during the last one month/quarter, as the case may be, and a settlement would be required to be done at the end of every month of quarter.

Also, the trading members can settle the running accounts across segments and across stock exchanges for a particular client, the circulars said.

In respect of derivative market transactions, apart from the margin liability as on the date of settlement, the broker can retain additional margin requirement of maximum up to 125 per cent of margin requirement on the day of settlement to take care of any margin obligation arising in next 5 days.

Also, the actual settlement of funds and securities shall be done by the member, at least once in a calendar quarter or month, depending on the preference of the client.

Sebi had first announced the running account settlement norms in December 2009, pursuant to which the stock exchanges had asked their trading members to put in place required steps to implement these measures.

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