TaxTMI 
TaxTMI 
Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs)
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.... securities market and to protect the interest of investors in securities market. 2. In this regard, with a view to safeguard clients' funds placed with SBs/CMs, it has been decided to require the upstreaming of all client funds received by SBs/CMs to the Clearing Corporations (CCs). 3. As per the framework, no clients' funds shall be retained by SBs/ CMs on End of Day (EoD) basis. The clients' funds shall all be upstreamed by SB/ CMs to CCs only in the form of either cash, lien on FDR (subject to certain conditions enumerated below), or pledge of units of Mutual Fund Overnight Schemes (MFOS). The details of the framework are as follows: A. Upstreaming via FDRs created out of clients' funds: I. FDRs created by SBs/ CMs out of clients' f....
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....ed (demat) form, and must necessarily be pledged with a CC at all times. III. SBs/CMs shall maintain a dedicated demat account (hereinafter referred to as "Client Nodal MFOS Account") for subscription/ redemption of MFOS units. The depositories shall allow subscription/redemption transactions only in the said account. IV. From "Client Nodal MFOS Account", SBs/CMs shall provide MFOS units as collateral to the CC. While providing the units as collateral, SBs/CMs shall identify the end clients. In order to implement the same, a pledge shall be created from the Client Nodal MFOS account to SB/CM margin pledge account of the SB/CM. The SB/CM shall further repledge the same to CC using the existing pledge re-pledge mechanism. V. Clause 15.3.2.....
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....B account". III. In addition, CMs, who clear trades for other SBs, shall only use the designated bank account(s) maintained with the nomenclature "Name of the CM -TM prop account" to receive/pay proprietary funds from/to stock brokers. IV. Upstreaming of funds: Funds received on a given day by SBs shall be transferred to CMs, and by CMs to the CC any time during the day, but not later than the respective cutoff times. The respective cutoff times for upstreaming are as follow: Sr. No. Particular Cutoff time 1 CM upstreaming cutoff time To be decided by CC - not earlier than 6:00 PM 2 SB upstreaming cutoff time To be decided by CM - not earlier than 1 hour prior to CM upstreaming cutoff time V. To ensure that no residual ....
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.... b) Loss due to sale of unpaid securities c) Penalties d) Statutory levies (STT / Stamp Duty / SEBI Turnover Fee) e) Brokerage (including exchange transaction fee) f) Other charges (DP charges, etc.) g) Funds to be released to client on account of regulatory requirements such as running account settlement h) Funds withdrawal request from client SBs/CMs shall provide reconciliation statements to stock exchanges/CCs, as may be required by stock exchanges and CCs. Stock exchange/ CCs shall put in place an appropriate reporting mechanism for SBs/CMs for the above mentioned scenarios. The withdrawal request received from SB/CM for point no (a) to (f) above shall be transferred from CC to CM settlement account and from there ....
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....mplementation of provisions of this Circular and put in place a uniform penalty structure for non-compliance. 9. The stock exchanges, depositories, and clearing corporations are directed to: a. bring the provisions of this circular to the notice of stock brokers, depository participants, and clearing members, as the case may be, and also disseminate the same on their websites; b. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above provisions; c. communicate to SEBI, the status of the implementation of the provisions of this circular in their monthly development report and d. monitor compliance of this circular and submit a compliance report to SEBI in this regard by August 31, 20....