No more 3-day rush: SEBI eases rules for settlement of inactive trading accounts

In a bid to streamline operations and ease procedural burdens for brokers, market regulator SEBI on Monday relaxed settlement norms for brokerage accounts that remain inactive for more than 30 days. Funds from such accounts will now be returned on the next scheduled date for monthly settlement, as notified by stock exchanges in their annual calendars.

"It has been decided that the funds of such clients who have not traded in last 30 calendar days shall be settled on the upcoming settlement dates of monthly running account settlement cycle as notified by Exchanges in the annual calendar issued by them from time to time," SEBI said.

Previously, brokers were required to return funds in such inactive accounts within three working days of identifying inactivity.

"For the clients having credit balance, who have not done any transaction in the 30 calendar days since the last transaction and any amount of such client’s funds is lying with member for more than such 30 calendar days, the entire credit balance of client shall be returned to the client by TM, on the upcoming settlement dates of monthly running account settlement cycle (irrespective of settlement cycle preferred by the client) as stipulated by stock exchanges," the SEBI circular read.

SEBI clarified that if an inactive client resumes trading before the monthly settlement date, the funds would be handled according to the client’s existing preference for monthly or quarterly settlements.

"However, if the client trades after 30 calendar days and before aforesaid upcoming settlement dates of monthly running account settlement cycle, the settlement of account of client shall continue to be done by the Trading member as per the preference of quarterly/monthly as indicated by the client for running account settlement,” it added.

The revised norms, effective immediately, require stock exchanges to notify their members, update relevant regulations, and ensure compliance.