Maintenance of current accounts in multiple banks by Stock Brokers
Summary
This circular clarifies that stock brokers may maintain current accounts in multiple banks for client funds, settlement, and other mandated purposes. This permission is subject to maximum limits prescribed by Stock Exchanges or SEBI and requires the accounts to be used strictly for their defined purposes. The directive aims to facilitate seamless fund settlement and investor convenience while complying with prior regulatory mandates on account segregation.
Text
SEBI mandated that all brokers shall keep the money of the clients in a separate account and their own money in a separate account.
Bank account(s) which hold clients funds shall be named as 'Name of Stock Broker -Client Account', Bank account(s) held for the purpose of settlement would be named as 'Name of Stock Broker - Settlement Account'.
Banks shall not open current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions shall be routed through the CC/OD account.
RBI has permitted banks to open specific accounts which are stipulated under various statutes and instruction of other regulators/regulatory departments, without any restrictions placed in terms of the RBI circular dated August 06, 2020.
Stock Brokers should maintain current accounts in appropriate number of banks... for holding the client funds (i.e., Client Account), for settlement purposes (i.e., Settlement Account) and any other accounts mandated by Stock Exchanges such as Exchange Dues Account.
Brokers are using these accounts for their defined purposes.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Source: SecMarx — Maintenance of current accounts in multiple banks by Stock Brokers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.