SEBI's new guidelines on settlement of running account for brokers to come into effect from October 1 - know what will change

The regular settlement of accounts, according to SEBI's new guidelines, will help reduce the misunderstanding between the client and broker as their accounts will be cleared. The SEBI while drafting the guidelines had pointed out that if there is an excess amount in an account, why cannot it be settled by the brokers

The SEBI guidelines state that the brokers can keep only a 225 per cent margin and pay in, and other excess amounts have to be credited to the client’s account.

However, brokers have shown scepticism. 

1. There are three different markets– equity, currency and commodity which close at different hours. How will all three be settled in a day?

2. Client’s money (not of broker’s) which is in the clearing and not with the broker, why should that be settled?

3. In a case where the money is settled and the client wants a deal on the coming Monday, and there occurs an issue with the transaction, the client could be penalised or could miss the trade opportunity.

4. Many clients keep their money with brokers as a Fixed Deposit (FD). Withdrawing that FD just for settlement and creating a fresh FD will make the process lengthy and also their return will be affected.

5. If all the accounts are settled on Friday, there could be an impact on the liquidity.