Brokers can now use 75% of interest income from clients’ funds

Stock-brokers and dealers can now use 75 percent of the interest income from the funds of their clients, according to the amended Securities and Exchange Rules, 2020.

But there is a condition — the brokers have to deposit 25 percent of the interest income every six months from the consolidated customers' account (CCA) into the Investors' Protection Fund of the respective exchanges.

The interest should be deposited within 30 days after the end of each period, according to the gazette published on July 3.

Such deposits in the protection fund shall be reported to the respective stock exchanges with intimation to the commission, incorporating details of the calculation and supporting documents within 10 days of such deposit being made.

Previously, brokers were supposed to divide interest income among their clients.

Then the stockbrokers demanded permission to use the fund as the process of calculating the interest payment is complex.

Before 2021, the stockbrokers could use the interest income from the CCA without sharing it with the clients.