Commodity arms of Motilal, IIFL declared unfit

NEW DELHI: Sebi has declared Motilal Oswal Commodities Broker and India Infoline Commodities as not ‘fit and proper’ for undertaking commodity derivative trades.The two were among 300 brokerages named by Sebi in a first information report (FIR) pointing to the violation of rules in the National Spot Exchange Limited (NSEL) scam.These brokers were allegedly involved in illegal forward contracts at NSEL in contravention of the Forward Contract Regulations Act 1952 (FCRA). SEBI termed the contracts as illegal as NSEL had authority to allow trading only in spot contracts, which must be settled in 11 days.Reputation is an important factor for consideration of ‘Fit and Proper Criterion’ and the reputation of the noticee has been seriously eroded, said Madhabi Puri Buch, Whole Time Director at Sebi.“Thus, I find that the notice is not a fit and proper person to be granted registration/ to operate as a commodity derivatives broker,” Buch said on Motilal Oswal Commodities Broker case."The Noticee, by virtue of being a broker, and by its own admission, has facilitated transactions in the said paired contracts for its clients on the NSEL platform. This in itself establishes a close association between the Noticee on the one hand and paired contracts and NSEL on the other. Over and above this, the Noticee, by its own admission allowed himself to become a channel and instrument for NSEL to promote paired contracts amongst its clients," Buch said. The close association of Motilal Oswal Commodities Broker to NSEL, he said, and the paired contracts, and the relatability of the same to the broker, the serious adverse observations of the various courts and authorities have, in turn, seriously eroded the reputation and belief in competence, fairness, honesty, integrity and character of the Motilal Oswal Commodities Broker. The noticee shall cease to act, directly or indirectly, as a commodity derivatives brokers, he said in the order.A similar order was issued in case of India Infoline Commodities."In case of any existing clients of the Noticee as commodity derivatives broker, the Noticee shall allow such clients to withdraw or transfer their securities or funds held in its custody or withdraw any assignment given to it, without any additional cost to such clients within 45 days from the date of this order," Sebi order on India Infoline Commodities read."In case of failure of any clients to withdraw or transfer their securities or funds within 45 days from the date of this order, the Noticee shall transfer its balance clients with their corresponding securities and funds to another person, holding a valid certificate of registration to carry on such activity, within a further period of 30 days. Such person should not be directly or indirectly related to the Noticee," it read.ET had earlier in the day reported that a Mumbai police arm dealing with financial crimes has called about 100 brokers to ascertain their alleged roles in illegal contracts traded on the National Spot Exchange (NSEL), taking forward the probe into a complaint of mass irregularities at the mothballed commodities bourse. The Economic Offences Wing (EOW) has already questioned about 15 of these brokers in the past two days, official sources told ET.

from Economic Times https://ift.tt/2VhKiS6