Received your Monthly/Quarterly Payout Report? Want to understand what this report is all about? We’re here to help you. Read this article to know all you want about the Monthly/Quarterly Payout Report.

What is Quarterly Settlement of Funds & Securities?

Before we learn what a Monthly/Quarterly Payout Report is, we need to understand the Quarterly Settlement of Funds & Securities policy introduced by the Securities and Exchange Board of India (SEBI) in 2009.

According to this policy, your broker needs to transfer unutilized funds to the client’s bank account on a monthly/quarterly basis. This initiative by SEBI ensures higher security of trader’s funds and securities.

As per the recent circular effective from August 2021, below are the main points of SEBI’s guidelines:

  • If your trading account balance is more than zero on the date of settlement, then the entire amount will be credited to your bank account.
  • If your trading account balance is more than zero on the date of settlement and no transaction (funds pay-in or trading activity) in 30 days, then the funds will be flushed out in a monthly settlement period.
  • If you are having any margin requirement on the settlement date, your broker will block an additional 125% (Total 225 = 100+125) margin against holdings (pledged securities), after that if there is any shortfall in the margin, then funds will be retained, and reverse any excess funds to your account.
  • All accrual charges/debit charges will be retained, and funds will be credited to your account after deduction.

Let’s understand, what is the Quarterly Payout Report

This report contains all the details of funds transferred to your account or retained by the broker on the settlement date. Below are the few things that this report summarizes:

  • Value of funds and securities available and retained
  • Details of payout
  • Amount not required to be returned

Let’s go over the key details of this report

The total value of funds and securities available

This section contains the balance of your funds and securities as of the date of this statement. Unencumbered balance is calculated after adjusting the value of unsettled balances in trade day billing and required margin amount. Apart from this, it also contains details of the value of securities available for trade on T day (Trading day).

Explanation regarding retention of funds and securities

Before we discuss what this section of the report contains you should know when the funds need to be retained. According to SEBI, the broker needs to block an additional 125% (Total 225 = 100+125) margin against holdings (pledged securities).

Let’s understand this with an example:

Say, you have Rs. 1,50,000 in your account and have taken four lots of security X with a required margin of Rs. 25,000 per lot. So, Rs. 1,00,000 would be blocked from your account, leaving a balance of Rs. 50,000. As per the rules, the broker has to maintain a 225% balance for the open position held by you. In this example, you need to maintain the total margin of Rs. 2,25,000 (1,00,000*225%). As the fund available in your account is only Rs. 1,50,000, your account will be marked as retained, and the broker will not refund any amount to your account.

This part of the report gives you the details of the debit balance in your account (if any) and your funds and securities pay-in obligations on T and T+1 day for BSECM, NSECM, NSEFO, NSE Currency, and MCX Currency. Apart from it, this showcases a 225% margin requirement as per SEBI guidelines and the maximum funds and securities that can be retained.

Retention of funds and securities (value)

In this section, you will get the total value of the funds retained by your broker. Also, you will get the below-mentioned details of the securities retained by your broker:

  1. Scrip Name
  2. International Securities Identification Number (ISIN)
  3. Quantity
  4. Closing rate as on T-1 day
  5. Haircut
  6. Amount

Details of payout

This part contains details regarding the value of funds and securities released by your broker and credited to your account. In the above-mentioned example, let’s say you had a credit balance of Rs. 3,00,000 instead of 1,50,000. As per SEBI guidelines, your broker needs to maintain a balance of Rs. 2,25,000, which means you still have a credit balance of Rs. 75,000 in your account. In such a case, your broker needs to release this amount and credit it to your registered bank account.

You can also view the detailed information of the securities that are credited to your Demat accounts, such as Scrip Name, ISIN, Quantity, Closing rate as on T-1 day, Value, Haircut, and Amount.

Conclusion

Whether you trade regularly or not, knowing your funds and securities movement is important to make improved financial decisions. This report helps you get a detailed summary of the funds and securities retained and/or credited by your broker. It also showcases your fund’s pay-in obligations and the minimum margin you need to maintain in your account as required by SEBI as on the date of settlement. You will receive your Quarterly Payout Report on your registered email ID as and when the settlement happens.