Stock brokers’ association ANMI has flagged off concerns on action being initiated by market regulator SEBI against a few broker entities for trading on paired contracts on the National Spot Exchange Ltd (NSEL) platform and classifying them as “not fit and proper person”.

These brothers were members of the now-defunct NSEL.

This comes after SEBI has cancelled the registration of a few brokers, including government enterprise PEC Ltd, for allegedly allowing their clients to trade in illegal paired contracts NSEL and failing to fulfil the “fit and proper” criteria.

‘Why MCA didn’t act?’

In a letter to PMO and the Finance Ministry on October 14, the Association of National Exchanges Members of India (ANMI) said, “If the contracts traded were illegal then the Ministry of Consumer Affairs should have immediately stopped trading in the contract. This action would have saved a lot of investors and members,” it added.

It further said the MCA had not taken timely action on the NSEL, which was granted exemption by it, and shifting the blame on the broker entity requires to be re-looked.

“Orders being issued will erode not only the credibility of SEBI but also hugely damage the reputation of India’s commodity markets,” it added.

From September 2009, the NSEL started trading operations in paired contracts wherein members could buy (T+2/ T+3) contracts and sell (T+25/ T+36) contracts, and the transactions were done on the same day and as per NSEL, the trades done in paired contract were in compliance with exemption received from the Ministry of Consumer Affairs.

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