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Markets regulator SEBI on Tuesday suspended the registration of brokerage firm Religare Commodities for its alleged involvement in illegal paired contracts on the now defunct National Spot Exchange Ltd (NSEL).
By providing access for taking exposure to 'paired contracts', the brokerage exposed its clients to the risk involved in trading in a product that did not have regulatory approval, SEBI said in its order.
Further, the regulator said the trading activities of the noticee (Religare Commodities) in 'paired contracts' for its clients on the NSEL platform have serious ingredients jeopardising the competence and integrity of the noticee in the securities market.
- Also Read: SEBI disposes show cause notices against Sharekhan Commodities in National Spot Exchange scam
Accordingly, SEBI has suspended the registration of Religare Commodities as a commodities derivative broker, for three months from the date of this order or till the FIR filed against the broking firm by EOW (Economic Offences Wing) ceases to be pending or till the noticee is acquitted by a court about the FIR, whichever is later.
Also, SEBI said the orders would come into force with immediate effect. In September 2009, NSEL introduced the concept of paired contracts for trading, which allowed the buying and selling of the same commodity through two different contracts at two different prices on the exchange platform.
The scheme of paired contracts traded on NSEL had caused a loss of ₹5,500 crore to investors, as per the order.
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