Trading Members (TMs) — stock brokers, as a norm, are required to settle the client funds on the first Friday of the month/quarter. This was mandated by market regulator SEBI in 2018 to safeguard the interest of the investors.

This rule increased the confidence as it prevented brokers from using the client funds for other purposes like using one client’s fund for the settlement of another client or for proprietary purposes.

However, the broker’s Industry Standard Forum (ISF) has been saying that the TMs faced operational difficulties even though this measure is good. Because, processing the settlement for all their clients on the same day leads to errors and payment missing out. So, they recommended the settlement to be spread into two days — on Friday and/or Saturday to avoid any issues.

SEBI has accepted the recommendation and, in a circular released on December 28, has allowed the settlement of client accounts on Friday and Saturday. This is likely to ease the operational pressure the brokers have been facing and can reduce the issues related to the settlement.

This is effective January 2024 for monthly settlement and January-March 2024 quarter for quarterly settlement. The upstreaming of client funds from brokers to the clearing corporations will continue to happen.

In a separate circular, released on December 27, SEBI has extended the timeline for providing the choice of nomination in demat accounts and mutual fund folios. It has been extended from December 31, 2023, to June 30, 2024.

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