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Market Intelligence › Basic Terminologies
The quarterly settlement rule and its purpose
Published by The Retail Trader · JUL 28, 2026 · Compliance & Regulation
Money lying in your trading account stays with the broker. There is a rule that says unused money must be sent back to your bank periodically.
At a set interval the broker has to transfer the client's credit balance back to the bank account, except for a small retention that may be kept for the margin on existing positions.
The purpose is straightforward. Client money sitting with a broker for a long time is a risk, and that risk needs to be reduced.
These four habits make this protection real:
• Check the credit that arrives after settlement in your bank statement.
• Read the retention statement the broker sends.
• Do not keep more funds in the trading account than you need.
• Look at your ledger once a month, since every charge shows up there.
Using a trading account like a savings account is a hidden risk. Money sitting there earns no interest and is not in your custody, and seeing it there also tends to inflate your position size.
This article is for educational purposes only. It is not a buy or sell recommendation, not a claim of guaranteed returns, and not advice. Rules, rates and mechanics change from time to time at the exchanges, SEBI and the RBI, so verify every number yourself with your broker or an official source.