Chapter 22: Statement of Account from Stock Broker and Depository

The Statement of Account for Funds (commonly referred to as the Client Financial Ledger) is a detailed, running accounting record maintained by the stock broker documenting every financial debit and credit associated with a client's trading account.

Statutory Obligations

• Brokers are mandated by SEBI to issue a statement of funds at least once every month (or quarterly, depending on client settlement preference) to all active clients.
• If any transaction occurs during a month, an updated statement must be dispatched via email or post within the prescribed regulatory timeline.

Anatomy of a Broker Ledger

• Credit Entries (+): Funds transferred into the trading account from the client's verified bank account; sales proceeds received from shares sold; intraday or derivative trading profits; credits from running account adjustments.
• Debit Entries (-): Funds debited for share purchases on settlement day; statutory levies and brokerage; MTM losses incurred in derivatives trading; payouts transferred to the client's bank account.
• Running Balance: Shows whether the client has surplus credit funds with the broker or owes debit funds.

From the Depository Participant (DP), investors receive statements tracking their electronic securities balances. These statements are divided into two distinct components:

1. Statement of Holdings (Holding Statement)

• Provides a snapshot of all securities held in the demat account as of a specific date.
• Details the company name, ISIN, total quantity held, free balance (available for transfer or sale), pledged balance (locked under margin pledge), and current market valuation.

2. Statement of Transactions (Transaction Statement)

• Functions like a bank passbook for shares, chronologically recording every inward and outward movement of securities over a specified period.
• Records settlement credits (shares purchased), market settlement debits (shares sold), off-market transfers, and corporate action credits (bonus shares, stock splits).
• Displays the counterparty details, execution timestamp, and settlement number for every transaction.

Prudent investors follow structured reconciliation practices to safeguard their portfolio:

1. Cross-Check Contract Notes with the Ledger: Verify that the net amounts debited or credited on your contract notes match the corresponding entries in your broker financial ledger.
2. Reconcile Share Debits with Trade Executions: Confirm that shares debited from your demat account correspond to sell orders you authorized, and that purchased shares appear in your demat holding statement by the T+1 settlement afternoon.
3. Review Margin Pledges: Check that pledged securities in your holding statement match the collateral you intended to provide, and that no unpledged shares have been locked without your knowledge.
4. Report Errors Promptly: Any unexplained debit entry in either funds or securities should be disputed in writing with the broker/DP within 7 days of receiving the statement.