Sebi to meet top commodity brokers in ~56-bn NSEL case

The Securities and Exchange Board of India (Sebi) has convened a meeting of leading commodity brokers on Tuesday to hear them on the alleged violation of various trading laws in the ~56-billion National Spot Exchange Limited (NSEL) payment default case.

Sebi is yet to pronounce the final order in the case. The meeting is being convened after the brokers lost their case at the high court (HC) here. To avoid Sebi's stick, companies had sought de-registration of defunct commodity broking companies on NSEL. The regulator had refused and the HC upheld the stand. The brokers include Anand Rathi Commodities, Motilal Oswal Commodities, India Infoline Commodities, Phillip Commodities and Geofin Comtrade.

Sources say these firms do not want to exit commodity broking but wish to continue under a different company banner. The markets regulator wanted to give a final opportunity to brokers found guilty of mis-selling paired contracts on the NSEL platform. But, the HC committee, under the chairmanship of a retired judge, found violations of several norms, which prompted the regulator to act against these brokers, said sources.

Emails sent by Business Standardto these brokers went unanswered.

The Forward Contracts Regulation Act was repealed with effect from end-September 2015 and the Forward Markets Commission was merged with Sebi. The latter has been regulating the NSEL case since then. A little over a year before, Sebi had issued show cause notices to these brokers, as to why they should not be declared as having failed the “fit and proper” test rule in this regard. “Any commodity broker found guilty in the NSEL scam is also not fit to work in the securities markets. Sebi must take stern action,” said Ketan Shah, head of the NSEL Investors Action Group.