We’d like to inform you about SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2022/101, regarding the Quarterly Settlement of Running Account of Client’s Funds lying with Sharekhan.

IMPACT POINT 1: Adding funds on October 7 If you add funds to your Sharekhan account on Friday, Oct 7, for use on Monday, Oct 10, the funds will be transferred back to your Sharekhan-linked bank account on Oct 8 in accordance with the new Quarterly Settlement rule. Unless you plan to utilize the funds on Oct 7, we suggest that you add funds on Oct 8. IMPACT POINT 2: Funds already available in your account as on October 7 Please be aware that funds already available in your account as on Friday, Oct 7, which you plan to trade with on Monday, Oct 10, will be transferred back to you on Saturday, Oct 8. We suggest that you add funds to your Sharekhan account on Oct 8 for trading seamlessly in the week starting Monday, Oct 10.

What is Quarterly Settlement of Funds & Securities?
As you might be aware already, in line SEBI’s Quarterly Settlement of Funds & Securities guidelines, Sharekhan transfers unutilized funds to your mapped bank account on a regular basis, typically on a quarterly basis.

What is changing with the upcoming Quarterly Settlement
In line with the SEBI Circular referenced earlier, effective Oct 1, 2022, the settlement of unutilized funds for a quarter will take place on the first Friday of the next quarter (October, January, April and July of every year). If the first Friday is a trading holiday, then the settlement shall happen on the previous trading day.

What you can expect on Saturday, October 8
On Oct 8, your trading account balance as on Oct 7 End of Day (minus the Retention Amount) will be transferred to your Sharekhan-mapped bank account.

How is the Retention Amount calculated?
The amount that Sharekhan shall retain and shall return to the customer is calculated on this basis:

• Maximum funds Sharekhan can retain = Entire fund pay-in obligation PLUS Cash margin to be retained (50% of End-of-Day margin requirement) PLUS 225% End-of-Day margin after reducing 50% Cash margin and the value of Securities pledged (after haircut).
• Funds to be returned to customer = Fund balance MINUS Maximum funds Sharekhan can retain.

Sample Settlement Scenario
Let’s see an example scenario, which will demonstrate how the calculation works:

• Say you have a funds balance of Rs 3,00,000, a fund pay-in obligation of Rs 1,10,000 and End-of-Day margin requirement of Rs 1,00,000. Further, you have Securities pledged worth Rs 2,00,000.
• Sharekhan has to retain entire pay-in obligation of funds outstanding at the end of day on date of settlement, across all segments, which is Rs 1,10,000.
• Further, Sharekhan has to retain 50% of End-of-Day margin, which is Rs 50,000.
• Another amount to be retained is 225% of margin after reducing 50% Cash margin and the value of Securities pledged (after haircut). Let’s see how that is computed:
• 225% of End-of-Day margin = Rs 1,00,000 * 225% = Rs 2,25,000
• This sum MINUS cash margin as computed earlier = Rs 2,25,000 – Rs 50,000 = Rs 1,75,000
• Finally, let’s calculate 225% of End-of-Day margin to be retained from funds (if available) after adjusting Securities pledged: Rs 1,75,000 – Rs 2,00,000 = negative Rs 25,000. This means that Rs 0 is to be retained by Sharekhan under this head.
• Maximum funds Sharekhan can retain = Fund pay-in obligation (Rs 1,10,000) PLUS Cash margin to be retained (Rs 50,000) PLUS 225% End-of-Day margin after reducing 50% Cash margin and the value of Securities pledged (after haircut) (Rs 0) = Rs 1,60,000.
• Funds to be returned to customer = Fund balance (Rs 3,00,000) MINUS Maximum funds Sharekhan can retain (Rs 1,60,000) = Rs 1,40,000.

In this scenario, Sharekhan will transfer Rs 1,40,000 to the customer’s mapped bank account.

For in-depth understanding of this calculation and for sample payout scenarios, click here to refer to Clause 5 of NSE’s FAQs on SEBI’s Quarterly Settlement, which deal with the Retention Amount calculation.

Important good-to-knows

1. NSE has drafted relevant FAQs on the SEBI Quarterly Settlement rules here. We would urge you to go through them for clarity.

2. The upcoming 4 Quarterly Settlement dates are:

• Oct 7, 2022
• Jan 6, 2023
• April 7, 2023
• July 7, 2023

Transferring funds seamlessly to trade on Monday, Oct 10
With funds likely to be transferred to you on Saturday, Oct 8, you might have to transfer funds back to your Sharekhan account in order to trade seamlessly Monday, Oct 10, onwards.

Sharekhan has made it super-easy to transfer funds online. Here’s a step-by-step walkthrough to transfer funds, which covers all the available modes of online fund transfers.

IMPORTANT: Fund transfers to your Sharekhan account should be made ONLY through your Sharekhan-mapped bank account.

In case of queries, feel free to get in touch with your Branch/Relationship Manager.