Sebi issues new guidelines for settling outstanding accounts

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New Delhi, June 16 (PTI) Capital markets regulator Sebi on Wednesday released new guidelines for the settlement of the client’s current account of funds and securities that will be applicable from August 1.

Under the guidelines, the withholding of any amount intended for administrative or operational difficulties related to the settlement of accounts of regular business customers (active customers) will be removed, the Securities and Exchange Board of India (Sebi) said in a circular.

Settlement of the client’s current funds account will be made by the merchant member after considering the end-of-day fund obligation on the settlement date on all stock exchanges, at least once within a 30- or 90-day interval. between two payments of the current account according to the customer’s preference.

In the case of a client with a pending trade position on the day the current account of funds settlement is expected, a trading member may hold calculated funds in the manner specified by the regulator, Sebi said.

A trading member can retain 225 percent of the total margin responsibility across all segments of the exchanges. A trader member will first adjust the value of the securities (after application of an appropriate discount) accepted as collateral by clients by means of a “margin pledge”. The pledge will be created in the deposit system for the purposes of margin and commodity value (after application of an appropriate haircut) respectively. Thereafter, the merchant member will adjust the client’s funds. Sebi said excess securities in the form of a margin pledge or any equivalent cash collateral identifiable with the client and deposited with clearing companies, after adjusting 225 percent of the margin liabilities, did not need to be disengaged.

According to Sebi, a customer’s checking account will be considered settled only by making an actual payment to the customer’s bank account and not by making journal entries.

Journal entries in the customer account will only be allowed for the withdrawal or cancellation of charges from the customer’s account.

For customers with a credit balance and not having carried out any transaction within 30 calendar days since the last transaction, the credit balance will be returned by the merchant member within the following three working days, regardless of the date on which the current account was previously set.

In cases where a physical payment instrument (check or sight draft) is issued by a merchant member for the settlement of a current account due to the failure of electronic payment instructions, the date of completion of the physical instrument in the customer’s bank account will be considered the date of settlement. An authorized person would not be allowed to accept the client’s funds and securities, and the trading member was instructed to maintain appropriate control.

Exclusive trading by authorized persons would only be allowed on its own funds and securities and not using client funds, Sebi said.

Once a merchant member has settled the checking account of a customer’s funds, an indication must be sent to the customer by SMS to the mobile number and also by e-mail.

The indication must include details of the funds transfer and, in case of electronic transfer, the number and date of the transaction. In the case of physical payment instruments, the number and date of the instrument must be mentioned.

A merchant member must send the custody statement with the current account statement to customers in accordance with the provisions in force within five working days.

Customers must bring any dispute on the current account statement to the attention of the merchant member concerned within 30 working days from the date of the statement.

The regulator also instructed exchanges to develop an online system for effective monitoring of the timely settlement of open accounts for client funds and to verify that excess client funds are not being held by a trader member at the date of settlement of current accounts.

The aim of the online system will be to discourage merchant members from holding on to customer surplus funds after outstanding accounts are settled, taking into account all customer obligations through exchanges. The responsibility for monitoring the compliance regulation of trading members’ current accounts can be shared between exchanges, Sebi said.

In February 2020, Sebi halted the transfer of ownership of securities to commercial members’ mat account for margin purposes and commercial members are required to accept client guarantees in the form of securities only through a ‘margin pledge’. created in the deposit system. . RAM PTI SP DRR


Warning :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI


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