Fellow Traders and Investors,
I see many queries online on whether same funds can be used to trade Equity and after 3.30pm be used to trade commodity when trading with the same brokerage firm. There are many brokers who don’t let you do this, but there are a few who let you do this.
I am attaching the SEBI and FMC circulars, which clearly say that a broker is not allowed to transfer funds for a client between equity and commodity accounts. If a person wants to do this, he has to first withdraw the money from equity to his bank account and then transfer it back to the commodity account.
But note that funds which are in your equity account is allowed to be used for both equity and currency trading. It can’t be used for commodity trading.
So if your broker is offering this, beware! He is not being compliant to SEBI/FMC regulations. If he is not compliant to one rule, it is possible that he is not being compliant to other rules as well, which tomorrow might cause harm to the business and in turn affect your trading account with him.
Here is the link to the SEBI circular
Here is the link to FMC circular
25th Dec 2015, SEBI penalizes Greshma Shares and Stocks Limited – Rs 20lks for allowing the same funds to be used for trading equity and commodity. Reiterates everything we had posted earlier. Check this link for the circular.
2th Jan 2016, SEBI penalizes Anand Rathi for Rs 30 lks for allowing same funds to be used for trading equity and commodity. Check this circular.
Empowering Indian retail investors/traders