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Running account settlement exchange wise ?

29 March 2012

I have a query regarding the Running Account Settlement. If a client trades in both NSE and BSE, then whether Trading Member will send him one combined "Running Account Settlement " statement quarterly/ monthly, as the case may

Trading Member will send him Exchange wise Running Account Settlement?

Thanks in advance.

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RAMESH CHANDRA SHARMA (munka istentisztelet) (899 Points)
Replied 29 March 2012

EXCHANGE WISE ACCOUNT STATMENT WILL BE PROVIDED BY THE BROKER OR TRADING MEMBER......

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Krunal Raichura (Financial Advisory) (2134 Points)
Replied 29 March 2012

i think all sorts of reports are provided by broker / trading member and can easily be accessible online nowadays for the clients

Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

Originally posted by : RAMESH ...cma final
	EXCHANGE WISE ACCOUNT STATMENT WILL BE PROVIDED BY THE BROKER OR TRADING MEMBER......

I want to further clear my question:

There are two types of compliance to be made by the Trading member..........

1. To send quarterly/ monthly "Statement of Accounts of Funds and Securities" for the period quarterly/ monthly chosen by the client and that i know, has to be sent exchange wise.

2. To settle running account of the client quarterly/ monthly as the case may be ............

My query is with regard to second point.

Are you sure, such settlement also has to be done exchange wise.........and if yes, can u provide me the name of that Trading Member doing the setllement Exchange wise.

Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

I am asking this question from the "AUDIT" point of view. I am the Internal Auditor and have to give report and comment on this issue.

RAMESH CHANDRA SHARMA (munka istentisztelet) (899 Points)
Replied 29 March 2012

in respect to provide the account statment the statement should be provided separately .....this is clear...

now as far as the settlement of account is concerned .....i dont get ur point....

i am with a sub broker .....and when i prepare the accounts at the end of the year of my clients....i merge the all transaction into one file whether it is of bse or nse .....so if u r asking that whether the balance that stands in different exchange can be merged or not than i can say "yes".....pls be clear with ur question ....if possible with an example....

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Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

DEALINGS WITH CLIENTS

(1.1) Dealings between a client and a stock broker (trading members included)

(SEBI circular MIRSD/ SE /Cir-19/2009 dated 3rd December, 2009, Exchange

Download Ref. No: NSE/INSP/13606, Circular No. NSE/INSP/2009/85 dated 3rd

December, 2009)

SEBI had issued circular regarding dealings between a client and a stock broker

(trading members included). Illustrative Points covered in the circular are as follows:-

• Client Registration

• Running Account Authorization

• Actual settlement for funds & securities on monthly / quarterly basis

• Electronic Contract Notes

Unless otherwise specifically agreed to by a Client, the settlement of

funds/securities shall be done within 24 hours of the payout. However, a client may specifically authorize the stock broker to maintain a unning

account subject to the following conditions:

a. The authorization shall be renewed at least once a year and shall be

dated.

b. The authorization shall be signed by the client only and not by any

authorised person on his behalf or any holder of the Power of

Attorney.

c. The authorization shall contain a clause that the Client may revoke the authorization at any time.

d. For the clients having outstanding obligations on the settlement date,

the stock broker may retain the requisite securities/funds towards such obligations and may also retain the funds expected to be required to meet margin obligations for next 5 trading days, calculated in the manner specified by the exchanges.

e. The actual settlement of funds and securities shall be done by the broker, at least once in a calendar quarter or month, depending on the preference of the client. While settling the account, the broker shall send to the client a ‘statement of accounts’ containing an extract from the client ledger for funds and an extract from the register of securities displaying all receipts/deliveries of funds/securities. The statement shall also explain the retention of funds/securities and the details of the pledge, if any.

f. The client shall bring any dispute arising from the statement of

account or settlement so made to the notice of the broker preferably

within 7 working days from the date of receipt of funds/securities or

statement, as the case may be.

g. Such periodic settlement of running account may not be necessary:

i. for clients availing margin trading facility as per SEBI circular

ii. for funds received from the clients towards collaterals/margin in

the form of bank guarantee (BG)/Fixed Deposit receipts (FDR).

h. The stock broker shall transfer the funds / securities lying in the creditof the client within one working day of the request if the same are lying with him and within three working days from the request if the same are lying with the Clearing Member/Clearing Corporation.

i. There shall be no inter-client adjustments for the purpose of settlement of the ‘running account’.

j. These conditions shall not apply to institutional clients settling trades

through custodians. The existing practice may continue for them.

Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

Above circular requires to send a statment of account at the time of settlement of running account.

My question is "Whether this running account setllemnt is done EXCHANGE WISE"

RAMESH CHANDRA SHARMA (munka istentisztelet) (899 Points)
Replied 29 March 2012

ok....i got it......if m not wrong this running account settlement is done on "net basis" .....

.lets have an example....i am answerring as far as i understand ur question...

suppose mr. x has RS. 2500 debit in NSE and RS. 3000 credit in BSE then he need not to pay RS 2500 separately for nse ....it should be settled on NET WISE " with the credit amount of RS. 3000 and he will be issued a cheque of RS. 500.......this is all i got to answer ......

Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

Ok.........that means running account is not settled exchange wise, the balance in other exchange is also adhusted at the time of settlement?

Now plz refer the following link relating to "Updated Consolidate Circular" by NSE

NSE/INSP/16781

Circular No. NSE/INSP/2011/112 DATED 14-01-2011

Relevant part is quoted herein below

• For the purpose of quarterly/monthly settlement trading member may settle across segments of the same exchange for a particular client. "

"The word "same" has been used by NSE .

"It means that NSE does not intend to get the client accounts settled with the balances lying with other exchange (BSE)."?

Please clarify.........

RAMESH CHANDRA SHARMA (munka istentisztelet) (899 Points)
Replied 29 March 2012

U DIDNT YET GET THE POINT .............OK.........ITS SOME SORT OF HARD TO INTERPRET THESE LINES .....BUT THERE IS ONE THING THAT U HAVE TO DO.....IS THAT JUST THINK FROM THE POINT OF VIEW OF THE TRADING MEMBER........OK......NOW IF THERE IS A CREDIT BALANCE IN ONE EXCHANGE AND THERE IS DEBIT BALANCE IN ANOTHER EXCHANGE ....THE TRADING MEMBER PASS JV ENTRIES (AS FAR AS I KNOW) IN THE CLIENT'S ACCOUNT AND AUTOMATICALLY THE INDIVIDUAL EXCHANGE BALANCE GOT SETTLED AND THE BALANCE AMOUNT IS ISSUED AS CHEQUE TO THE CLIENT .....I CANT EXPLAIN ANY MORE ......ITS ALL I HAVE TO EXPLAIN.......THANKS...

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Krunal Raichura (Financial Advisory) (2134 Points)
Replied 29 March 2012

@ Sonam...with respect to your NSE circular....i think this is how it works -

"It means that NSE does not intend to get the client accounts settled with the balances lying with other exchange (BSE)."?

No. NSE and BSE are two different exchanges and entities and cannot make such settlements.

The exchange has accounts of brokers and look into their settlement.

It is the broker who will maintain client accounts and has to settle them.

From the perspective of stock exchange, I have nothing to do with clients....I would deal only with my members i.e. brokers. If a broker has bought stock of some amount, for himself or client doesnt matter....whether client gives money or doesnt...the broker has to pay me. So for exchange, business is only with their brokers.

For the purpose of quarterly/monthly settlement trading member may settle across segments of the same exchange for a particular client.

This is exactly what im saying, that a trading member may settle across segments of same exchange. For example, If i have a debit of 1 lakh on NSE F&O and a credit of 5 lakh on NSE Cash, the settlement can be done withing segment.

However, if I have a debit of 1 lakh on NSE F&O, no credit in NSE Cash, credit of 2 lakh in BSE....in that case the broker will settle with NSE against my credit and settle my account on net basis as explained by Ramesh

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Sonam Bidasaria (CA) (770 Points)
Replied 29 March 2012

Thanks to both of you ............

I am doing Internal Audit of two stock brokers and they are also following the same thing as explaind by Mr. Ramesh.

and they also do settle by passing JVs as Mr. Ramesh has tols. My point is "WHETHER THIS SET-OFF OR ADJUSTMENT IS IN COMPLIANCE WITH THE CIRCULAR ISSSUED BY NSE

Plz read the attached filed and give me your replies on last time more.

Attached File : 78771 956356 28 2011.pdf downloaded: 203 times