The Hindu Business Line : SEBI pulls up HSE for non-redressal of grievances

The Securities and Exchange Board of India (SEBI) has pulled up the Hyderabad Stock Exchange (HSE) for the failure of some of its member- brokers in redressal of investors' complaints on the pretext that those transactions were not done on the HSE trading platform.

According to the exchange sources, the market regulator during its recent inspection of books of HSE observed that certain complaints filed against the member-brokers remained unresolved stating that they did not take place.

The regulator made it clear that notwithstanding the fact that the transactions have taken place on the National Stock Exchange (NSE), it was the member brokers of HSE who had executed those transactions in NSE through a member-broker of NSE and also confirmed the same to their clients by way of issue of contract notes.

According to sources, the watchdog has pointed out that, "As such it is the duty of the members of HSE to redress the grievances of the investors." SEBI has also observed that "it was not correct on the part of the exchange to conclude that it was beyond the purview of the exchange to redress the complaints and advising the complainants to take up the matter with NSE directly."

SEBI has advised the HSE management that the investor complaints cannot be closed on the grounds of falling beyond the purview of the bourse. "In such cases, the exchange was advised to ensure not only redressal of investors complaints but also initiate strict disciplinary action against the member-brokers for having violated the rules and regulations of SEBI as also the bye-laws of the stock exchange," sources said.

The regulator has also pointed out that trading by the member-brokers of HSE with the members of NSE without obtaining registration as sub-broker was a serious violation of Rule 3 of SEBI (Stock Brokers & Sub-Brokers) Regulations 1992 read with SEBI circular dated January 16, 1998, warranting a very serious action against such member-brokers .

Observing that since these transactions took place on NSE and/or BSE, they were in the nature of `off-the-floor transactions' to HSE, the regulator advised that the member-brokers should inform the same to their exchange management in terms of the SEBI guidelines.

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