What is Running Account Settlement/Quarterly Settlement?

What is Running Account Settlement/Quarterly Settlement?

To safeguard the interest of the investors & traders, SEBI mandated all the brokerages to reverse the idle funds from the Client’s trading account to their bank account. This process is called Quarterly Settlement/Running Account Settlement and it is done once in 90 Days (Quarter) or 30 Days as per the preference of the client. .

As per the recent circular dated 16th June 2021, SEBI announced a few additions to the existing process wherein the brokers are mandated to transfer the funds back to the client’s bank account within 3 working days, if there were no trades in the last 30 calendar days. In simple words, if you have funds in your trading account and haven’t traded for the last 30 days, your funds will be transferred back to your bank account within the next 3 days (i.e., 30 Days + 3 Days). This is also applicable to the clients that have chosen the settlement cycle of 90 Days.

Let’s say, You’ve have added funds of ₹50,000 into your trading account on 1st January and haven’t traded for the entire month. As a result of the new added regulation to the quarterly settlement, your funds of ₹50,000 will be transferred back to your bank account within 2nd February.

On the date of running account settlement, if the client has any open positions, Fyers may retain an additional margins of upto 125% of the position taken and the remaining amount will be transferred back to client’s bank account.

For Example, On the day of settlement, You have a Fund balance of ₹5,00,000 and have taken a position in Nifty Futures worth ₹2,00,000. So, an additional margin of 125% will be blocked and the remaining amount will be transferred back to your bank account. The calculation is as follows:

➤ Fund Balance: ₹5,00,000
➤ Open Position: ₹2,00,000
➤ Additional Margin blocked = 125% of 2,00,000 = ₹2,50,000

Payout as per Quarterly Settlement =

5,00,000 (Fund Balance) – 2,00,000 (Nifty Futures) – 2,50,000 (Additional Margin Blocked)

Payout as per Quarterly Settlement is ₹50,000

For more details, you can check out the Exchange Q&A here.

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