Knowledge Base

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.

• Securities circular
• Commodities circular

ADDING FUNDS ON OCTOBER 4 – If you add funds to your Samco account on Friday, October 4, for use on Monday, October 7, your trading account balance as on October 4 end of day (minus the retention amount) will be transferred back to your Samco-linked bank account on October 4 and 5 in accordance with the new Quarterly Settlement rule. Unless you plan to utilize the funds on October 4, we suggest that you add funds on October 5 (Saturday).

FUNDS ALREADY AVAILABLE IN YOUR A/C AS ON OCTOBER 4 – Please note that funds already available in your account as on Friday, October 4, which you plan to trade with on Monday, October 7, will be transferred back to you on Friday, October 4. We suggest that you add funds to your Samco account on October 5 (Saturday) for trading seamlessly in the week starting Monday, October 7.

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, all brokers need to settle the accounts of all clients on the first Friday of every quarter i.e. July 5^th 2024, October 4^th 2024, January 3^rd 2025, April 4^th 2025, and so on. If the first Friday is a trading holiday, then such settlement shall happen on the previous trading day which is Thursday.

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