Capital markets regulator Sebi on Wednesday came out with new guidelines on settlement of running accounts of clients' funds lying with stock brokers, to be applicable from October 1.

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Under the guidelines, the settlement of the running account of funds of the client will be done by the trading member after considering the End of the day (EOD) obligation of funds as on the date of settlement across all the exchanges on the first Friday of the quarter for all the clients.

The running account of funds will be settled on the first Friday of October 2022, January 2023, April 2023, July 2023, and so on for all the clients, the Securities and Exchange Board of India (Sebi) said in a circular.

If the first Friday is a trading holiday, then such settlement will happen on the previous trading day.

For clients, who have opted for monthly settlement, running accounts will be settled on the first Friday of every month. If the first Friday is a trading holiday, then such settlement will happen on the previous trading day.

In market parlance, the process of transferring back the unused funds of the clients to their accounts by stock brokers is called running account settlement.

Under the rules, stock brokers need to reverse the unutilised funds lying in the clients' trading accounts at least once within a gap of 30 or 90 days between two settlements of running accounts as per the preference of the client.

Further, for the clients, who have not done any transaction in the 30 calendar days, funds will be returned to the client within the next three working days irrespective of the date when the running account was previously settled.

The new guidelines will be applicable from October 1, the regulator noted.