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What is Quarterly Settlement?

Settlement of Funds & Securities through Quarterly Settlement is an initiative by SEBI to ensure brokers do not misuse client funds and/or securities.

In order to safeguard the interest of the investor/trader, SEBI mandated all stockbrokers to reverse any funds that are lying in the trading account back to the Bank account of the client. This Quarterly settlement has to be done for both funds and securities of the clients. SEBI mandates that this is done once in a period of 90 days.

However, SEBI's rule is that any account where the balance is less than Rs 10,000 (Rs 50000 for MCX) need not be settled meaning the funds needn't be transferred back to the client's account. Also, it allows the broker to block an additional 125% margins for any open position held by the client and then reverse any excess funds lying in the account. 

However, if you haven't made any trades in the month/quarter considered for settlement, in this case, the money in your trading account will be sent to your bank account as per this NSE circular.

To learn more about the Quarterly settlement and its impact, read this article on Z-connect.

If you don't want to miss out on opportunities due to this regulation, you could buy liquid bees or liquid mutual funds any one day in the quarter and sell them the next day morning as soon as the market opens.

However, If you don’t have the bandwidth to do this on your own, you can request us to track, remind, and place an order on behalf of you. To do this, visit the profile page on Console and set the preference as ‘Buy overnight liquid fund’ & click on 'Save preference' as shown below -



Note: 

  1. If you have not set a preference, the funds will be settled and the money will be sent to your bank account.
  2. If you transfer money back into your trading account within 3 Days, we will refund the payment gateway charges.
  3. The option for buying overnight liquid funds is only applicable in case you maintain your demat account with Zerodha. In all other cases, the funds are compulsorily sent to your bank account.