FAQs – Actual Settlement of Funds & Securities

If the client executes a transaction on the Exchange on or before the date on which member is scheduled (within three working days) to return the credit balance, in that case, the member may retain the funds as clarified in Point 5 and settle the balance amount to client.

For the clients having outstanding obligations on the day on which settlement of running account of funds is scheduled, the following funds may be retained by a member at the time of settlement.

• Entire pay-in obligation of funds outstanding at the end of day on date of settlement, across all segments
• Margin liability as on the date of settlement of running account, in all segments and additional margins (maximum up to 125% of total margin liability on the day of settlement). The margin liability shall include the end of the day margin requirement excluding the margin on consolidated crystallized obligation/ MTM; therefore, the trading member may retain 225% of the total margin liability in all the segments across exchanges
• The margin liability may also include the margin collected by the Member from their clients as per the risk management policy and informed to the clients.

An indicative format of retention statement is attached as Annexure 1. In case of any other format, members should ensure that the contents specified by the relevant circulars are covered in the retention statement.

Note:

a) Trading Member will first adjust the value of securities (after applying appropriate haircut) accepted as collateral from the clients by way of ‘margin pledge’ created in the Depository system for the purpose of margin and value of commodities (after applying appropriate haircut) respectively as per the applicable provisions/ guidelines of margin collection and thereafter trading member shall adjust the client funds.

b) While computing the value of securities, the closing rate for the trade date prior to the settlement date (T-1 day) should be considered after appropriate hair-cut viz. VaR margin rate applicable for the security in the Capital Market segment

c) In case the member applies haircut more than VaR rate on a regular basis and the actual margin is collected and exposure is provided accordingly, then such higher rate may be considered for determining the amount to be retained, provided the member has intimated the requirement of additional margins to the clients through the policy and procedures document and consistently through the daily margin statements issued to clients

d) No inter client adjustment/ passing of Journal Entries can be done/ considered for the purpose of settling client accounts.

e) Obtaining of authorization from the clients to the effect that no settlement need be done for running accounts is contradictory to the SEBI requirement and hence not permissible.

As clarified vide Exchange circular NSE/INSP/47227 dated February 03, 2021, every member shall send a complete ‘Statement of Accounts’ for funds, securities and commodities in respect of each of its clients on weekly basis. Members have to send the ‘Statement of Accounts’ on or before the next four trading days of subsequent week.

Further all members will continue to send ‘statement of accounts’ containing an extract from the client ledger for funds, an extract from the register of securities/commodities displaying all receipts and deliveries of securities/commodities and a statement explaining the retention of funds/commodities within 5 days from the date of settlement.

Notwithstanding anything contained above, Member shall issue the statement of accounts for funds, securities and commodities for such period as may be requested by the client from time to time.

The statement of accounts may be sent in hard or in soft form as per the consent obtained from the client and POD / dispatch register / logs of email sent should be retained by the member.

Members may refer Exchange circular NSE/INSP/47227 dated February 03, 2021, for the format of the statement of accounts for funds and securities/commodities.

The periodic settlement as per the above-mentioned rules (Point no.1) is not required to be done in the following cases:

a) Clients settling trades through “custodians.”

b) Margin received in the form of Bank Guarantees and Fixed Deposit Receipts, which are created by clients.

c) Clearing members who are clearing trades of custodial participants/ trading members

d) Cheques received by the Member from the clients and credited in the respective client ledger but uncleared on settlement date.

e) In the case of new clients, no settlement would be required in the month/quarter in which funds are received by the Member for the first time. However, members shall ensure that, if the client is having credit balance, and has not done any transaction in the 30 calendar days since the last transaction, the credit balance shall be returned to the client by TM, within next three working days.

No. All Members are advised to strictly comply with the abovementioned requirement relating to running account settlement and ensure strict adherence to the timelines prescribed therein. Further, members should ensure to credit the settlement amount to the client bank account directly and not run any schemes to invest the actual settlement amount with the consent/without consent of the client.

For the clients having credit balance (on or after August 01, 2021), who have not done any transaction in the 30 calendar days since the last transaction, the credit balance shall be returned to the client by trading member, within next three working days irrespective of the date when the running account was previously settled.

Annexure 1

INDICATIVE FORMAT FOR RETENTION STATEMENT

(A) Total value of clients Funds and Securities available prior to settlement

(B) Total value of clients Funds and Securities available prior to settlement

(C) Explanation regarding Retention of Funds and Securities

(D) Retention of Funds

(E) Details of Payout to client

(F) Amount not required to be returned