Home Market News SEBI proposes revised settlement rules for inactive trading accounts
In a consultation paper, SEBI proposed that instead of daily monitoring, funds of clients inactive for 30 calendar days should be settled during the monthly running account settlement cycle.
By Sheersh Kapoor December 5, 2024, 5:32:50 PM IST (Published)
The Securities and Exchange Board of India (SEBI) has proposed a revised settlement framework for inactive trading accounts, aimed at enhancing operational efficiency while safeguarding investors’ interests.
Currently, stock brokers must return funds to clients who have not traded in the last 30 days within three working days. This practice, known as running account or quarterly settlement, requires brokers to identify such clients daily, often resulting in procedural inefficiencies.
In a consultation paper, SEBI proposed that instead of daily monitoring, funds of clients inactive for 30 calendar days should be settled during the monthly running account settlement cycle, as scheduled in annual calendars issued by stock exchanges.
The move addresses concerns raised by the Brokers' Industry Standards Forum (ISF), which highlighted the operational challenges of daily settlements. Additionally, since client funds are already upstreamed to clearing corporations, the risk of misuse is minimal, making the current rule less critical, according to the forum.
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SEBI’s proposal balances operational ease with investor protection, ensuring funds are returned promptly while reducing unnecessary administrative burdens.
The markets regulator has invited public feedback on the draft circular until December 26, 2024. Stakeholders can submit comments through SEBI’s official website or via email.
If approved, the new rules will take effect immediately, and stock exchanges will be required to update their systems to comply. For more details, visit SEBI’s website under the “Legal → Circulars” section.
