INSUBCONTINENT EXCLUSIVE:
MUMBAI: The National Stock Exchange (NSE) has penalised over 50 brokers for failing to comply with the new derivative market rules that were
introduced by the capital markets regulator later in March in an attempt to tamp down wild bets, said atleast two brokers privy to the
development.
The exchange has fined these brokers in the range of Rs 3 lakh to Rs 5 lakh after the futures and options positions of some of
their clients exceeded the fresh limits imposed by Securities and Exchange Board of India
Brokers have sought relief from the regulator citing logistical difficulties because of the lockdown.
Sebi on March 20 had put a cap on the
bearish bets that foreign investors, mutual funds and proprietary desks can take on index derivative contracts without owning the underlying
The regulator also made it expensive for these big-ticket investors to take bullish bets beyond a limit, while restricting trading in stock
futures and options.
The circular came in effect from March 23 and brokers who are clearing members were required to identify the F-O
positions that were in violation of the circular and take appropriate action
Brokers claimed several firms faced operational issues as their key employees were unable to reach their offices with March 23 being the
mutual funds, foreign investors and even listed companies have been given compliance relaxations
An email sent to NSE went unanswered.
The NSE circular had proposed stringent penalties on the brokers who failed to comply with the
As per NSE, for each day of violation a clearing member could be fined 1% of the value of positions that are in violation of the circular or
Rs 5 lakh, whichever is lower
It also suggested a minimum penalty of Rs 50,000.
Market participants are saying the quantum of penalties is also too high as several
brokerages are currently struggling amid tanking markets and reducing retail participation
There are nearly 2,000 brokerages registered with the market regulator
Amongst the broking industry, there is also a great divide since top 25 brokerages contribute for over half of the market volume and top 100
contribute to 75% of the volume
There are about 1,000 odd small-time brokerages which operate with shoestring budgets and most of the members being penalised by NSE
currently are such smaller ones, said brokers.
Association of National Exchanges of Members of India (ANMI), the industry body for brokers,
has approached the regulator on the matter
According to Vijay Bhushan, president, ANMI, the exchange did not even warn the brokers about about the roll-over of positions and imposed
