SEBI received representations from various stakeholders, stock brokers, and brokers’ associations citing certain operational difficulties in implementation of the framework.
Addressing the issue, SEBI issued the circular stating that stock brokers (SBs) or clearing members (CMs) will upstream all the clients’ clear credit balances to clearing corporations (CCs) on the End of Day (EOD) basis. Such upstreaming will be done only in the form of either cash, lien on Fixed Deposit Receipts (FDRs) created out of clients’ funds, or pledge of units of Mutual Fund Overnight Schemes (MFOS) created out of clients’ funds.
Stock brokers are required to maintain designated client bank accounts to receive funds from their clients. The nomenclature of all such accounts will be changed to either of the two categories of bank accounts — Up Streaming Client Nodal Bank Account (USCNBA) and Down Streaming Client Nodal Bank Account (DSCNBA).
In Up Streaming Client Nodal Bank Account, SB/CM will receive clients’ funds, while payment to clients will be done only from Down Streaming Client Nodal Bank Account.
In addition, CMs, who clear trades for other SBs, will only use the designated bank account maintained with the nomenclature “Name of the CM-TM prop account” to receive or pay proprietary funds from/to stock brokers.
The clients can request SBs/CMs to release funds at any time during the day. All payment requests of the client received on a day will be processed on or before the next settlement day. In cases where the payment request is not processed on the same day, SB/CMs need to ensure that the funds of the client are placed with the clearing corporation.
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