According to SEBI’s mandate, all stockbrokers must settle client accounts every 30 or 90 days. To meet this requirement, the free balance will get credited to your registered primary bank account.
- The settlement of funds and securities through quarterly settlement is an initiative by SEBI to safeguard the interests of investors/traders.
- SEBI has mandated all stockbrokers to return unutilized fund balances in the client’s trading account to their primary bank account.
- Free balance refers to the balance that remains unutilized with the stockbroker after considering any upcoming funds Pay-in obligation to the exchange for any trade done and 225% of margin after adjusting for any stocks that have been pledged as of the settlement date.
- If a customer has not traded over the previous 30 days, their funds balance will be credited back to their primary bank account registered with us.
Refer to the following link to check the SEBI circular of Securities & Commodities accounts.
Scenario 1: Adding Funds on October 3rd
If you add funds to your Samco account on Friday, October 3rd, intending to use them on Monday, October 6th, here’s what will happen:
Your trading account balance as of the end of October 3rd (after deducting the retention amount) will be transferred back to your linked bank account on October 3rd and 4th, following the Quarterly Settlement rule.
Recommendation: To avoid this, consider adding funds on Sunday, October 5th.
Scenario 2: Funds Already in Your Account on October 3rd
If you have funds in your account on Friday, October 3rd, and plan to use them for trading on Monday, October 6th, the funds will be returned to your linked bank account on October 4th.
Recommendation: Add funds on Sunday, October 5th, to ensure smooth trading throughout the week starting Monday, October 6th.
Example:
- Assume you have ₹1 lakh in your account and have taken 5 lots of Nifty options (assume the margin for one lot of Nifty is ₹10,000), then ₹50,000 would be blocked from your account leaving you with a balance of ₹50,000.
- The Exchange allows a broker to block 2.25 times the margin it levies for the open position held by the client and after blocking this 2.25 times margin if there is any credit, it needs to be reversed.
- In the above example, 2.25 times ₹50,000 would be ₹1,12,500. Since the funds available in your account are only ₹1 lakh the broker need not make any refund and will mark your account as ‘retained’. Once the broker marks your account as retained, he is required to send you a statement explaining the basis for such retention.
- Say, instead of ₹1 lakh, you have ₹3 lakh in your account. In that case, after applying the 2.25 margin rule, the credit standing in your account will be ₹1,87,500 (₹3,00,000-₹1,12,500). This amount will be reversed & credited to your bank account.
Note: As per SEBI’s circular, brokers must settle all client accounts on the first Friday of every quarter—Q1 (Apr–Jun): 4th/5th Apr 2025, Q2 (Jul–Sep): 4th/5th Jul 2025, Q3 (Oct–Dec): 3rd/4th Oct 2025, Q4 (Jan–Mar): 2nd/3rd Jan 2026; if Friday is a trading holiday, settlement will be on the previous trading day (Thursday).
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