The Securities and Exchange Board of India (SEBI) after taking cognizance of the NSEL case held the commodity broking arms of Motilal Oswal and India Infoline (IIFL) as 'not fit and proper', reported the Money Control.
Currently, SEBI is probing nearly 300 brokers on charges of conspiring against the NSEL to dupe investors. The report stated, the exchange supposedly did not maintain adequate stocks on trades it permitted, as brokers sold alluring contracts to investors. During 2013, the NSEL had outstanding payments of Rs 5,600 crore.
In an order uploaded on its website on February 22, SEBI said that the brokers had a close association with NSEL and empowered themselves to “become a medium”.
SEBI on February 22, in a directive uploaded on its web portal stated, the brokers formed a close connection with NSEL and permitted themselves to “become a medium”, the Money Control report mentioned.
“Thus… the noticee is not a fit and proper person to be granted registration/to operate as a commodity derivatives broker”.
The Money Control reported, SEBI asked the clients of the commodity broking entities to take out or shift their securities in possession of the broken under 45 days without incurring extra charges.
Anand Rathi Commodities, Philip Commodities and Geofin Commodities are some of the top brokers who are being probed in the case currently.
The report also states, during the last few years, various brokers counting in Motilal Oswal and IIFL have shifted their commodity broking arm under the same group that runs stock broking under SEBI’s unified licence regime.
Meanwhile, SEBI’s 'not fit and proper' status suits the commodity wings, however it remains unclear in terms of what it would indicate for the unified broking business of the companies.
(With agency inputs)...