SEBI has released proposed guidelines concerning the treatment of unclaimed funds and securities held by brokers. Currently, brokers are obligated to settle the credit balance of clients on the first Friday and/or Saturday of every month or quarter. If brokers are unable to settle client accounts due to reasons such as non-availability of bank accounts or non-traceability of clients, they must make efforts to trace the clients and maintain an audit trail.
Under the new rules, client accounts that remain unclaimed will be placed under ‘enquiry status’, prompting brokers to contact the clients promptly. Client funds can be invested in liquid mutual funds or overnight schemes and must be transferred to clearing corporations within 30 days of becoming unclaimed.
In cases where clients are untraceable, brokers will reach out to the client’s introducer, nominee, employer, or any other relevant individuals. If a broker is declared a defaulter, all unclaimed funds will be directly transferred to the dedicated bank account of the stock exchange. Any funds remaining unclaimed for a year will undergo the same downstreaming process.
[Also read: SEBI mandates separate units for brokers to trade G-Secs on NDS-OM]
Overall, these guidelines aim to streamline the process of handling unclaimed funds and securities, ensuring that appropriate measures are taken to safeguard client assets effectively.
