NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to Securities Broking Operations
A broker has a client with a ledger debit balance for several days after the settlement. Under SEBI/exchange norms on running account settlement, which of the following is correct about settling the client's funds and securities when the client has opted for a running account?
Under a running account authorisation, the broker must settle funds and securities at the periodic frequency chosen by the client, within the maximum interval prescribed by SEBI, after retaining amounts for margin and outstanding obligations. It cannot hold balances indefinitely or wait until account closure.
- AThe broker may never settle funds periodically
- BThe broker may retain funds indefinitely without any settlement
- CThe broker must settle the running account at the frequency chosen by the client, subject to the prescribed maximum interval, after considering margin obligationsCorrect
- DThe broker settles only when the client closes the account
Explanation
Running account authorisation allows the broker to hold funds and securities, but periodic settlement is mandatory at the client-chosen frequency, within the maximum interval prescribed by SEBI, after retaining margin and settlement obligations. Indefinite retention or settling only at closure is not allowed.
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