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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to Securities Broking Operations

A client has an unspent credit balance in the trading account of her broker. Under SEBI's rules on running account settlement, the broker should settle the client's funds and securities lying with it at what minimum frequency, unless the client specifically authorises otherwise within the permitted framework?

Brokers must settle a client's running account either monthly or quarterly, depending on the client's choice recorded in the authorisation. It is not daily, annual or only at account closure. This limits how long client money stays unsettled with the broker.

  1. ADaily, with no exceptions
  2. BOnce in a calendar quarter or month as per the client's choiceCorrect
  3. COnce a year
  4. DOnly when the client closes the account

Explanation

Under SEBI's running account settlement framework, the broker must settle the client's running account at a frequency of either a calendar month or a calendar quarter, as chosen by the client. Daily settlement is not mandated. Annual settlement or settlement only at closure would leave funds with the broker too long.

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