Refund of security deposit
Summary
SEBI mandates stock exchanges to release security deposits from Trading Members within specific timeframes after the surrender of their membership registration. The retention period varies based on whether the member engaged in client trading or proprietary trading, with limits set at three or five years for client traders and one or three years for proprietary traders. Exchanges are required to amend their bye-laws, notify members, and report implementation status to SEBI.
Text
On approval of application for surrender of Trading Member’s registration by SEBI, the Exchange shall release Security Deposit of the Trading Member (engaged in trading on behalf of clients) after the period mentioned at point a) or b), whichever is earlier: (a) Three years from the date of receipt of surrender application by Exchange from the Trading Member (in order to meet any investor claims), or (b) Five years from the date of disablement of Trading Member’s trading terminals by the Exchange.
On approval of application for surrender of Trading Member’s registration by SEBI, the Exchange shall release Security Deposit of the Trading Member (engaged only in proprietary trading in last three years prior to the date of application) after the period mentioned at point a) or b), whichever is earlier: (a) one year from the date of receipt of surrender application by exchange from the Trading Member, or (b) three years from the date of disablement of Trading Member’s trading terminals by the Exchange.
make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately;
bring the provisions of this circular to the notice of the members of the stock exchange and also to disseminate the same through their website;
communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Reports to SEBI.
Source: SecMarx — Refund of security deposit. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.