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In a second setback this week, the Securities Appellate Tribunal (SAT) has quashed SEBI order withdrawing the recognition of Indian Commodity Exchange (ICEX) and gave the exchange a year to meet SEBI-prescribed regulations before restarting operations.
On Tuesday, SAT set aside a 2019 SEBI order which declared five brokerages not “fit and proper” in an alleged scam that broke out at the National Spot Exchange in 2013.
Justice Tarun Agarwala, Presiding Officer, and Meera Swarup, Technical Member of SAT, in an order on Thursday said the Covid lockdown had completely stopped physical trading in the commodity sector, especially in ICEX, which was doing delivery-based contracts.
In this hour of crisis when every effort is being made to revive the country’s economy, it is also the duty of the regulator to ensure that the exchange revives itself, for which at least an opportunity should be given by the regulator,” said SAT.
Voluntary suspension of activities
ICEX voluntarily suspended all its operations in March to protect investor interest. The exchange has 226 shareholders including Central Warehousing Corporation, MMTC, Indian Potash, Bajaj Holding and Investment, and India Bulls Housing Finance.
“Heavens are not falling requiring the regulator to withdraw the recognition of ICEX as a recognised exchange. Some latitude to raise funds, and become compliant ought to have been granted,” SAT added.
The finding of the Executive Director (SEBI) that it would be difficult for ICEX to raise funds and complete all compliances is purely based on speculation and cannot be sustained, it said.
Trading operations to remain suspended
SAT, in its order on Thursday, said all trading operations on the exchange would remain suspended until it raises the requisite funds and complete all compliances to the satisfaction of SEBI within one year from today.
The money in the Investor Protection Fund and Investor Services Fund of the exchange will be utilised for settlement of any claims ,if any, and shall not be utilised for any other purposes, said SAT.
Within the stipulated period, if the appellant raises the requisite funds and completes all compliances, it can move an appropriate application before SEBI for resuming trading operations which will be duly considered and an appropriate order passed, the order said.
SEBI can withdraw recognition if the exchange fails to do so, it added.
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