As per SEBI circular MIRSD/ SE /Cir-19/2009 dated December 3, 2009 and

SEBI/HO/MRD/DP/CIR/P/2016/135 dated December 16, 2016, the settlement of funds

and / or securities shall be done within 1 working day of the pay-out, unless client

specifically authorizes the trading member in writing to maintain a running account.

Vide SEBI circular no. CIR/HO/MIRSD/DOP/CIR/P/2019/75 dated June 20, 2019, running

account for securities has been discontinued and therefore, SEBI circulars dated

December 03, 2009 and September 26, 2016, are now applicable for settlement of

running account of client’s “funds” only.

Vide SEBI circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/101 dated July 27, 2022, the

settlement of running account of funds of the client shall be done by the trading

member after considering the End of the day (EOD) obligation of funds as on the date

of settlement across all the Exchanges on first Friday of the Quarter (i.e., Apr-Jun, JulSep, Oct-Dec, Jan–Mar) for all the clients i.e. the running account of funds shall be

settled on first Friday of October 2022, January 2023, April 2023, July 2023 and so on. If

first Friday is a trading holiday, then such settlement shall happen on the previous

trading day.

For clients, who have opted for Monthly settlement, running account shall be settled

on first Friday of each month. If first Friday is a trading holiday, then such settlement

shall happen on the previous trading day.

In case a client wishes to maintain a running account for its funds with the trading

member, the client has to authorize the member in writing to retain its funds. Such

authorization should also contain:

▪ Mandate of the client as to whether the settlement of funds should be done on

monthly / quarterly basis.

▪ A clause stating thatthe Clientmay revoke the authorization at any time (i.e.without notice)

Running account authorisation received through online secured access by way of client

specific user id & password or through a registered email id of client is considered as

authorisation in writing.

As per SEBI circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/101 dated July 27, 2022, the

settlement of running account of funds of the client shall be done by the trading

member on first Friday of the Quarter (i.e., Apr-Jun, Jul-Sep, Oct-Dec, Jan–Mar) for all

the clients who have opted for quarterly settlement i.e., the running account of funds

shall be settled on first Friday of October 2022, January 2023, April 2023, July 2023 and

so on. If first Friday is a trading holiday, then such settlement shall happen on the

previous trading day.

For clients, who have opted for Monthly settlement, running account shall be settled

on first Friday of each month. If first Friday is a trading holiday, then such settlement

shall happen on the previous trading day.

As per SEBI circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/101 dated July 27, 2022, the

actual settlement of funds shall be done by the member on first Friday of the Month or

Quarter as per the preference of the client.

Further, as per SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2021/577 dated June 16,

2021, for the clients having credit balance, who have not done any transaction in the 30

calendar days since the last transaction, the credit balance shall be returned to the

client by trading member, within next three working days irrespective of the date when

the running account was previously settled. Further, after settlement, if such client

returns to the member with fresh funds and no trades are executed during this period,

then members may compute the 30 calendar days for the purpose of subsequent

settlement from the day the member receives funds instead of the last transaction date.

However, member shall settle running account of client on first Friday of the quarter or

month as per as per the preference of the client irrespective of date of his/her last

transaction or receipt of funds.

Illustration (For client accounts having credit balance and not traded in last 30 calendar

days) 

*first Friday of the Quarter

If the client has an open position in the derivatives segment, then the date of contract

expiry or the date on which position is closed may be treated as last transaction date,

for the purpose of computing 30 calendar days for returning the credit balance to such

clients. However, members shall ensure settlement of running account of funds on first

Friday of the Month or Quarter as per the preference of the client.

Illustration (For client accounts having credit balance and open position in derivatives

segment)

If the client executes a transaction on the Exchange on or before the date on which

member is scheduled (within three working days) to return the credit balance, in that

case, the member may retain the funds as clarified in Point 5 and settle the balance

amount to client.

In case of client having any outstanding trade position on first Friday of the Month /

Quarter on which settlement of running account of funds is scheduled, a Trading

member may retain funds calculated in the manner specified below:

i. Entire pay-in obligation of funds outstanding at the end of day on date of

settlement, across all segments.

ii. Member may retain 50% of end of the day (EOD) margin requirement as cash

margin, excluding the margin on consolidated crystallized obligation/ MTM.

iii. Apart from 50% cash margin mentioned in point ii above, member may also

retain 225% of EOD margin (which includes additional 125% margin) reduced by

50% cash margin and the value of securities (after applying appropriate haircut)

accepted as collateral from the clients by way of ‘margin pledge’ created in the

Depository system for the purpose of margin and value of commodities (after

applying appropriate haircut). The margin liability shall include the end of the

day margin requirement in all the segments across exchanges excluding the

margin on consolidated crystallized obligation/ MTM. The margin liability may

also include the margin collected by the Member from their clients as per the

risk management policy and informed to the clients.

Computation for arriving at retention of excess client funds based on above points

would be as under:

^ Excess securities need not to be unpledged.

An indicative format of retention statement is attached as Annexure 1. In case of any other

format, members should ensure that the contents specified by the relevant circulars are

covered in the retention statement.

Note:

a) Client’s running account shall be considered settled if member has given

instructions to bank for credit to client’s bank account, provided that the member

has sufficient balance in its account.

b) While computing the value of securities, the closing rate for the trade date prior to

the settlement date (T-1 day) should be considered after appropriate hair-cut viz.

VaR margin rate applicable for the security in the Capital Market segment.

c) In case the member applies haircut more than VaR rate on a regular basis and the

actual margin is collected and exposure is provided accordingly, then such higher

rate may be considered for determining the amount to be retained, provided the member has intimated the requirement of additional margins to the clients through

the policy and procedures document and consistently through the daily margin

statements issued to clients.

d) No inter client adjustment/ passing of Journal Entries can be done/ considered for

the purpose of settling client accounts.

e) Obtaining of authorization from the clients to the effect that no settlement need be

done for running accounts is contradictory to the SEBI requirement and hence not

permissible. 

Excess securities (in the form of margin pledge/re-pledge) with Trading Member (TM),

Clearing Member (CM) or with Clearing Corporation (CC), after adjustment of the 225%

of the margin liability need not be unpledged for the purpose of periodic settlement.

For the purpose of settlement of funds, the mode of transfer of funds shall be by way

of electronic funds transfer viz., through National Electronic Funds Transfer (NEFT),

Real Time Gross Settlement (RTGS), etc.

Members may issue a physical payment instrument (cheque or demand draft), only in

cases where electronic payment instructions have failed or have been rejected by the

bank and after keeping adequate record of the same.

Further, in case offailureof electronic paymentinstructions due to incorrect bank account

details, members shall obtain correct bank details from clients and update their records

after keeping adequate audit trail.

No. Retention of any amount towards administrative / operational difficulties in settling

the accounts of clients is not permitted.

As clarified vide Exchange circular NSE/INSP/47227 dated February 03, 2021, every

member shall send a complete ‘Statement of Accounts’ for funds, securities and

commoditiesin respect of each of its clients on weekly basis. Members have to send the

‘Statement of Accounts’ on or before the next four trading days of subsequent week.

Further all members will continue to send ‘statement of accounts’ containing an extract

from the client ledger for funds, an extract from the register of securities/commodities

displaying all receipts and deliveries of securities/commodities and a statement

explaining the retention of funds/commodities within 5 days from the date of

settlement.

Notwithstanding anything contained above, Member shall issue the statement of

accounts for funds, securities and commodities for such period as may be requested by

the client from time to time.

The statement of accounts may be sent in hard or in soft form as per the consent

obtained from the client and POD / dispatch register / logs of email sent should be

retained by themember.

Members may refer Exchange circular NSE/INSP/47227 dated February 03, 2021, for

the format of the statement of accounts for funds and securities/commodities.

The members shall not be required to send the ‘Statement of Accounts’ to clients with

zero funds, zero securities and zero commodities balances and also has been flagged as

‘Inactive’ (i.e., if no trades are carried out by the client in the last 12 months across all

Exchanges) in the UCC database ofthe Exchange.

The periodic settlement as per the above- mentioned rules (Point no.1) is not required

to be done in the following cases:

a) Clients settling trades through “custodians.”

b) Margin received in the form of Bank Guarantees and Fixed Deposit Receipts, which

are created by clients.

c) Clearing members who are clearing trades of custodial participants/ trading

members

d) Cheques received by the Member from the clients and credited in the respective

client ledger but uncleared on settlement date.

e) In the case of new client, no settlement would be required on first settlement date

(i.e. first Friday of the Month or Quarter as per the preference of client) immediate

after registration of client. For example, a client who registered on October 01,2022

and opted quarterly settlement, would not be required to be settled on the first

settlement date i.e. October 07,2022 and should be settled on next settlement date

i.e. January 06,2023. However, members shall ensure that, if the client is having

credit balance, and has not done any transaction in the 30 calendar days since the

last transaction, the credit balance shall be returned to the client by TM, within next

three working days.

While settling client accounts, a member cannot retain funds in excess of the balances

mentioned in Point 5.

Accordingly, while ascertaining retention amount, a member cannot consider debit

balances of the client which are arising in the books of sister concern / associate of the

member registered in same/other exchanges / commodities broking.

No. All Members are advised to strictly comply with the abovementioned requirement

relating to running account settlement and ensure strict adherence to the timelines

prescribed therein. Further, members should ensure to credit the settlement amount to

the client bank account directly and not run any schemes to invest the actual settlement

amount with the consent/without consent of the client.

Yes, running account of funds of clients, which are scheduled to be settled in the month

of September and October (till October 06, 2022) may directly be settled on October 07,

2022.

Click here

Quarterly settlement clarification as per below Circular kindly click -

SEBI Circular No. CIR/HO/MIRSD/DOP/CIR/P/2019/139 dated 19.11.2019 (Click here)

NSE Circular No. NSE/INSP/36889 & NSE/INSP/43250 dated 02.02.2018 & 16.01.2020 (Click here)

1. The settlement of funds and / or securities shall be done within 1 working day of the pay-out, unless client specifically authorizes the trading member in writing to maintain a running account.
2. At least once in a calendar quarter or month, depending on the mandate of the client and the gap of between two running account settlements should not exceed 90 or 30 calendar days respectively.

Members need to consider the EOD balance of funds and securities of clients as on the date of settlement and ledger preferably should be zero

1. Entire pay-in obligation of funds & securities outstanding at the end of day on date of settlement
2. In Derivative segment apart from margin liability as on the date of settlement, additional margins (maximum up-to 125% of margin requirement on the day of settlement) . 
3. Trading members shall not retain the value of funds & securities to the extent of the value of turnover (gross turnover) executed on date of settlement in cash market segment.
4. An amount of up to Rs 10,000/- (net amount across segment and across stock exchanges) after taking a one-time written consent of the client and in the manner prescribed in Exchange Circular NSE/INSP/36889 dated February 02, 2018.
5. Trading members are directed to credit the settlement amount (Monthly/Quarterly) to the client bank account directly and not run any schemes to invest the actual settlement amount (Monthly / Quarterly) with the consent/without consent of the client / through POA in any scheme or investment products.

For the purpose of settlement of funds, the mode of transfer of funds shall be by way of electronic funds transfer viz., through National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS).

As per Exchange Circular NSE/INSP/24849 dated October 29, 2013, Members may retain an amount of up to Rs 10,000/- (net amount across segment and across stock exchanges) after taking a one-time written consent of the client.

The above threshold limit on retention of amount shall not be applicable in case of clients who have not traded even once during the month/quarter in which the settlement is being undertaken.

A Member is required to send to the client ‘statement of accounts’ containing an extract from the client ledger for funds, an extract from the register of securities displaying all receipts and deliveries of securities and a statement explaining the retention of funds and / or securities within 5 days from the date of settlement.

Securities lending and borrowing (SLB) is temporary lending of securities executed by a lender to a borrower of securities, for a stipulated duration, at a certain fee.

The SLB scheme is facilitated by the Exchange, through a screen based exchange-traded system. It has a centralized anonymous order book and all the borrowing and lending are cleared, settled and guaranteed. The expected lending fee is quoted as price and the tenures are available up to 12 months.

In this Platform, trader can borrow shares that they do not already own or can lend the stocks that they own. An SLB transaction has a rate of interest and a fixed tenure.

SLB is a legally approved medium for lending and borrowing of securities. The regulations were originally formed by SEBI in May 1997 and last modified in Nov 2012. All market participants including retail (except Qualified Foreign Investors) in the Indian securities market have been permitted to lend/borrow securities but only through an Authorized Intermediary (AI).

NCL (NSE clearing limited) and BOISL (BSE clearing corporation) are the only 2 authorized intermediaries presently, NCL is preferred and is getting bulk of the transactions today by the GEPL.

Investors who are holding certain stocks in their Demat account and are not looking to sell them in near future can take an advantage of SLB segment and lend the stocks for a certain fee and a stipulated duration (determined on the basis of the contract entered into), whereas,

Traders who are looking for short term opportunities can borrow the shares and possibly gain from the price movement in the stock.

What are the Features of Securities lending and borrowing scheme

Automated screen-based trading platform with the online matching of trades based on price-time priority

Tenure of lending and borrowing available up to a period of 12 months

A facility for placing early recall request for the securities lent is provided to the lender

A facility for the borrower to make an early repayment of securities and further re-lend them

The transactions are based on fixed monthly tenures with specified reverse leg settlement dates and the tenure ranges from 1 month up to 12 months.

The specified reverse leg settlement date is the first Thursday of the corresponding month.

Each reverse leg settlement date is assigned a specific series number. Majorly securities traded in the F&O segment are eligible for lending & borrowing under the scheme.

Market timing 9:15 a.m. to 5:00 p.m.

Benefits for Lenders

Lenders can earn additional income from the idle portfolio held as they receive a certain fee to lend the stock, depending upon the demand and time value. 

Lenders are entitled to all the corporate action like dividend, bonus etc. that takes place during the lending period.

No counterparty risk as all the transactions is guaranteed by the Clearing Corporations.

Transactions done in the SLB segment will not be treated as Transfer, based on clarification from Income Tax vide their circular no. 2/2008, dated 22 Feb, 2008 and Section 47(xv) of the Act. Thus there is no additional implication of Capital Gain Tax.

Benefits for Borrowers

SLB enables borrowers to meet the obligation in case of shortage in delivery and avoid an auction (seller shortage) in the Cash segment.

SLB enables arbitrage opportunity for borrowers if there is a price difference in the Cash and Derivatives market.

SLB enables borrowers to meet the obligation arising out of physical settlement under the derivatives segment.

The borrower would pay the dividend received on the record date + 1 (1 day after stock goes ex dividend) to the Exchange and the Exchange would pass it on to the lender of the securities.

In case of stock split, the borrower’s obligation is adjusted proportionately and lender receives the revised quantity.

Preferably, the transaction should be reversed in case of any corporate action.

As per the clarification from Income Tax vide their circular no. 2/2008, dated 22-2-2008 transactions done in the SLB shall not be regarded as transfer. For further details, please refer circular no. 2/2008, dated 22-2-2008 of the income tax department.

The Income Tax gives special recognition to SLBM; hence the trade is treated as an SLBM trade and there is no issue of Long Term or Short term gain.

The Income can be treated as Business Income or Short Term Income.

Margin & Other

All transactions under SLBS are subject to margins. The following margins are applicable for transactions under SLBS.

25% of the lending price is levied as margin on lending transactions on T day. This is released on completion of pay-in of T+1 settlement.

100% of the Lending price is levied as margin on the Participants for borrow transactions starting from T+1 day till the shares are returned by the borrower.

This is collected on an upfront basis at the time of the transaction.

The margin so collected is released on completion of pay-in of the respective settlement.

The applicable limit to the client shall be set as per the clear margin available in the client account.

In case of Lender, the Early Pay-in of the Shares shall be done as a normal practice before the execution of a trade

Lending fee

Lending fee refers to the actual price of the transaction at which the transaction is executed. Lending fee per share is quoted by the participants while entering into SLB Transactions.

Lending fee obligation is the lending fee per share*quantity of shares borrowed/lent.
For e.g., If a transaction is executed at Rs 5 per share for 100 shares of Security "X" then the total lending fee obligation for the borrower for security "X" will be Rs. 500.

The lending fee is levied as margin on the Participants for borrow transactions on T day on an upfront basis.

GST & other statutory charges are applicable as per the norms on Lending fees & Charges.

Documents required:

SLBM Registration forms

Addendum to POA

SLB thus is a prudent way for investors to make an additional income by lending their idle stocks at a certain fee, for the stipulated duration. The client can also borrow the stocks and can then benefit from arbitrage opportunity or meet the exchange obligation of the pay-in of stocks.

Process of Account Opening :

Step 1 :        Opening the Trading account (New Customer) or Confirmation Letter (Existing client) along with Addendum

Step 2 :        Allotment of UCC (Unique client Code)

Step 3 :        Opportunity in Stock will be communicated or client can view it at https://www.nseindia.com/market-data/securities-lending-and-borrowing

Step 4 :        Quote the Fees for Lending the share or call @ 022-66182362                                   

Step 5 :        DIS to be submitted for Early Payin of the Shares so Quoted or with POA the Shares payin shall happen immediately. Client having DP outside GEPL they may quote the market type as below:

Step 6 :        Contract Note shall be issued on the day of Transaction at EOD(End of Day)

Step 7 :        NO Contract note shall be issued at the time of Expiry i.e First Thursday of the Month and the shares shall be credited to the client account automatically.

 Execution Policy:

SLB orders will be placed only if the below conditions are satisfied:

The client should have given his/her physical consent to participate in the SLB segment

The client should not be deactivated/suspended on any or both the exchanges

The client should have required shares in Demat account

The stock should be part of the NSE derivatives segment

The order will be executed from the Head Office

Terms and Conditions:

This terms and conditions shall be read in conjunction with the KYC forms signed by the client during the account opening with GEPL Capital Pvt. Ltd. (herein referred to as ‘GEPL’)

This Facility shall be offered to the Clients at the sole discretion of ‘GEPL’.

Customers who wish to lend the shares should have the required number of shares in his/her Demat account before initiating the order placement; otherwise, the order will be rejected.

Customer who wishes to borrow the shares should have 100% of the lending price, Value at Risk margins, Extreme Loss Margins before placing an order.

‘GEPL’ reserves the right to refuse to offer this Facility to any Client or group of Clients and may withdraw the Facility at any time without prior notice or assigning any reason therefor.

‘GEPL’ will levy brokerage as per the market practice or as per ‘GEPL’ Management decision or as applicable in SLBM segment + GST on the lending/borrowing fee. Other statutory will be levy as per the exchange guidelines.

In case Of any discrepancy please call our customer care 022-66142701

Risk statement and disclaimer-

The Client agrees and understands that ‘GEPL Capital Pvt. Ltd.’ would not be liable in the event for reason including but not limited to volatility or system problems or slow or delayed response from system or trading halt, or any such other problem/glitch whereby not being able to establish access to the trading system/network, which may be beyond control of ‘GEPL Capital Pvt. Ltd.’

w.e.f. 30th August 2021.under the Interoperability scheme we have opted for NSE (NCL) as our Clearing corporation in Cash Segment

This will affect the change in the Pool account for securities Pay-in and with effect from the above date any shares shall not be accepted in any other account apart from the below DP account for Securities Pay-in arising out of obligation.