Running account settlement exchange wise ?

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

IF U HASN'T SAID SO....I WOULD HAVE IGNORED BECAUSE ITS VERY DIFFIULT TO UNDERSTAND THE LEGAL TERMINLOLGY AND M NOT SO CAPABLE TO SOLVE IT RATHER TO UNDERSTAND IT.....U KNOW......PLEASE DONT MIND....I TOLD U AS MUCH AS I KNOW.....

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

The set-off or adjustment is out of the purview of NSE circular.

If you want to make things simple, i would suggest you look at any transaction as follows -

1. Stock Exchange deals only with brokers, so see this relationship of stock exchange and broker as a different one.

2. Broker and Client is a different relationship.

The set-off or adjustment of a net basis for a client is a part of broker-client relationship. The stock exchange is no where involed in between that.

Even the circular which you have pasted in your earlier post is a SEBI Circular. It is the SEBI and not the stock exchange that talks about dealings between brokers and clients and issues the circular requiring settlement of clients accounts by brokers on a monthly or a quarterly basis.

If I am the stock exchange and you are the broker, I have nothing to do with your clients. I will be dealing only with you. On a daily basis we will be reconciling the net quantity that we have to deliever to each other of a particular stock (s) and the net amount due to you or to me.

For example, you may have 100 clients who may buy say 1 share of Reliance each and another 50 clients who may sell 1 share of Reliance each. As a stock exchange, I wouldnt talk about all this. I would tell you at the end of the day that from your account, net 50 shares are bought and you have to pay me for those 50 shares.

Hence, the adjustment or set off and settlement on net basis is allowed and thats how business is conducted.