SEBI Eases Fund Settlement Norms for Inactive Trading Accounts

The Securities and Exchange Board of India (Sebi) has revised its norms regarding the settlement of client funds in inactive trading accounts. This change eliminates the need for daily settlements, allowing funds to be settled as per the monthly cycle notified by stock exchanges, thus simplifying procedures and safeguarding investors.

The Securities and Exchange Board of India (SEBI) announced on Monday a relaxation in the norms for settling client funds in trading accounts that have been inactive for 30 days.

The new guidelines, effective immediately, are designed to simplify procedures for market participants and protect investors' interests. SEBI's circular mentions that stock brokers no longer need to identify and settle inactive accounts daily.

Funds in such accounts will now be settled as per the monthly running account settlement cycle noted in the stock exchanges' annual calendar. This change follows industry feedback on inefficiencies in the daily settlement process.

SEBI requires brokers to adjust the settlement if a client resumes trading before the next monthly cycle, based on their quarterly or monthly preference. Stock exchanges are to amend rules and widely share these updated provisions.

(With inputs from agencies.)