SEBI has come out with proposed guidelines on treatment of unclaimed funds and securities lying with brokers.
As per current norms, brokers are required to settle the credit balance of clients lying with them on the first Friday and/or Saturday of every month or quarter. If a member is unable to settle the client accounts due to non-availability of bank accounts or non-traceability of clients, brokers have to make all efforts to trace the clients to settle their funds and maintain an audit trail.
- Also read: SEBI mandates separate units for brokers to trade G-Secs on NDS-OM
According to the new rules, such client accounts will be put under ‘enquiry status’ and brokers will contact the clients immediately. Client funds can be parked in liquid mutual funds or overnight schemes and upstreamed to clearing corporations within 30 days of the funds becoming unclaimed.
Untraceable clients
For untraceable clients, the introducer of the client, nominee, employer or any other related person will be contacted.
If the broker is a declared defaulter, all unclaimed funds will be downstreamed and transferred directly to the dedicated bank account of the dedicated stock exchange. Funds remaining unclaimed for a year will be similarly downstreamed and transferred.
