Sebi, India’s capital markets regulator, has revoked the registrations of 39 stock brokers, seven commodity brokers, and 22 depository participants for failing to meet registration requirements. This decision was taken to prevent these entities from misusing their Sebi registration without actively participating in a depository or a recognized stock exchange, thus safeguarding uninformed investors.
Reasons for Registration Cancellation
The primary reason behind the cancellation of registration certificates was the failure of these entities to fulfill the conditions stipulated for holding a registration. This primarily involved their expulsion as members from recognized stock exchanges.
Stock Brokers and Commodity Brokers
The 39 stock brokers and seven commodity brokers were granted registrations with the condition of remaining members of a recognized stock exchange. However, after their expulsion, they no longer met the requirements of the Broker Regulations 1992. As per these regulations, stock brokers must be active members of recognized stock exchanges.
Depository Participants
The 22 depository participants had their agreements with depositories terminated, making them ineligible to meet the registration requirements stipulated under the DP Regulations, 2018. Since they were no longer associated with any depositories, Sebi cancelled their registrations.
Consequences of Cancelled Registration
Despite the cancellation of their registrations, these entities remain accountable for any actions or inactions during their period as stock brokers, commodity brokers, or depository participants. They are also required to pay any outstanding fees, dues, and interest owed to Sebi.
Responsibilities of the Cancelled Entities
Sebi has mandated these entities to perform specific actions to ensure smooth transition and investor protection:
- Maintaining and preserving records: The entities must preserve all necessary documents as required by regulations.
- Redressing investor grievances: They must continue to address investor complaints and resolve issues that might arise.
- Transfer of records, funds, and securities: The entities need to ensure the seamless transfer of all client records, funds, and securities.
- Continuity of service: They must maintain the continuity of services to their clients, including but not limited to account management and transaction processing.
- Addressing defaults or pending actions: They must address any defaults or pending actions during their previous operation.
List of Entities with Cancelled Registration
The following are some of the prominent entities whose registration has been cancelled:
Stock Brokers:
- Bezel Stock Brokers
- Reflection Investments
- Sumpoorna Portfolio
- Vineet Securities
- Quantum Global Securities
- Wellindia Securities
- Vrise Securities
- Credential Stock Brokers
- Aanya Commodities
- Amber Solutions
- Arcadia Share & Stock Brokers
- C.M. Goenka Stock Brokers
- Destiny Securities
Commodity Brokers:
- Wealth Mantra Commodities
- Sumpoorna Comtrade
- Chaitanya Commodities
- BVK Pulses Online Trading Company
- Infonic India Financial Services
- Financial Leaders Commodities
- Wellindia Commodities Integrated Stock Broking Services
Depository Participants:
- Moongipa Investments
- ASL Capital Holdings
- Atlanta Share Shopee
- Wealth Mantra
- Punjab and Maharashtra Co-Operative Bank
- Max Planwealth Securities
- Bright Shares and Stock
Sebi’s Actions and Investor Protection
Sebi’s decision to revoke the registrations of these entities serves as a deterrent for financial intermediaries that fail to adhere to regulatory standards. It emphasizes the regulator’s commitment to upholding the integrity of the capital markets and protecting the interests of investors. By canceling the registrations of these non-compliant entities, Sebi aims to prevent potential misuse of their registration and safeguard unsuspecting investors from fraudulent practices.
Take Away Points
- Sebi canceled the registration of several stock brokers, commodity brokers, and depository participants for failing to meet regulatory requirements.
- The primary reason for cancellation was the expulsion of these entities as members from recognized stock exchanges, rendering them ineligible to continue as intermediaries.
- These entities are accountable for their previous actions and must ensure the protection of investor interests during the transition process.
- Sebi’s decisive action reinforces its commitment to market integrity and investor protection.