The Indian Wire » Business » SEBI declares Motilal Oswal and India Infoline unfit to carry out brokerage operations

SEBI declares Motilal Oswal and India Infoline unfit to carry out brokerage operations

Market Regulator SEBI has declared that commodity brokerage firm-Motilal Oswal and India Infoline commodities as not “fit and proper” to carry out commodities brokerage. The regulator said that the reputation of both the firms have seriously been eroded which is important factor in considering any commodity brokerage firm “fit and proper”.

A commodity brokerage firm facilitates the selling and buying of financial securities on behalf of its clients, in lieu of some commission paid by the clients. The new ruling by SEBI is seen as an aftermath of the payment scam at the National Spot Exchange Limited(NSEL), that surfaced in 2013. The case attracted attention of probing agencies including SEBI as many entities including brokerage firms were involved in it.

Now, as per the order released by the regulator both the entities will not be able to carry out direct and indirect operations as commodity broker.

“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,” said Madhabi Puri Buch, whole time director of Sebi.

In the notice the regulator also clarified doubts regarding the current clients of the two commodity brokerage.”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,” notice read.

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