According to SEBI’s latest circular, brokers are required to settle the accounts of all clients on the first Friday of every quarter. The settlement dates are as follows: October 2022, January 2023, April 2023, July 2023, and so on. If the first Friday falls on a trading holiday, the settlement will occur on the preceding trading day, which is Thursday.
Note: Any funds debited from your Upstox trading account due to monthly or quarterly settlements will be credited to your primary bank account by 3:00 PM on the next working day. Please allow the specified turnaround time (TAT) for the transfer.
As per SEBI's mandate, stockbrokers must settle client accounts every 30 or 90 days. To comply with this regulation, any unutilized balance will be credited to your registered primary bank account.
The quarterly settlement process, which includes the settlement of funds and securities, is an initiative by SEBI to protect the interests of investors and traders. It ensures that all unutilized funds in a client’s trading account are returned to their primary bank account.
Free balance refers to the amount left in your account after accounting for:
- Any pending funds pay-in obligations to the exchange for executed trades.
- 225% of the margin requirement, adjusted for any stocks pledged as of the settlement date.
If you haven’t traded in the last 30 days, the balance in your account will be credited to your primary bank account.
For more details, refer to SEBI’s circulars on Securities and Commodities accounts:
Example:
- Suppose you have ₹1 lakh in your account and have taken 3 lots of Nifty options (with a margin of ₹27,000 per lot). In this case, ₹81,000 will be blocked from your account, leaving you with a balance of ₹19,000.
- The exchange allows brokers to block 2.25 times the margin for open positions. After applying this 2.25x margin, if any credit remains, it must be reversed.
- In the example above, 2.25 times ₹81,000 equals ₹1,82,250. Since your account balance is ₹1 lakh, no refund is required, and the broker will mark your account as 'retained.' When your account is marked as retained, the broker must send a statement explaining the basis for this retention.
- However, if any credit remains in your account after applying the 2.25x margin rule, it will be refunded to your bank account.
Related Article: