SEBI bars inter-client transfer of funds

Last Updated: Thursday, December 3, 2009 - 22:09

Mumbai: Market regulator SEBI today said
brokers will not be allowed to use funds from one client`s
account to buy securities or settle transactions of another
client, a move that will instil greater discipline among
market intermediaries.

"There shall be no inter-client adjustments for the
purpose of settlement of the `running account`," Securities
and Exchange Board of India (SEBI) said in a circular here.

These conditions, however, will not apply to
institutional clients, the regulator said, adding "the
existing practice may continue for them."

SEBI further said settlement of funds or securities shall
be done within 24 hours of the payout.

It also said client may specifically authorize the
stock broker to maintain a running account, provided
authorization is renewed at least once a year.

The market regulator further said 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.

SEBI also said the authorization shall contain a clause
that the client may revoke the authorization at any time.

Welcoming the move, SMC Capitals` equity head Jagannadham
Thunuguntla said, "There has been a continuous move by SEBI to
increase the transparency and this step is in that direction."

PTI



First Published: Thursday, December 3, 2009 - 22:09

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