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The Securities and Exchange Board of India (Sebi) has passed an order against SMC Global Securities for violations involving margin collection and reporting of the same to the exchanges.
“…the noticee being a clearing member has not only failed to collect the margin in the approved form/mode, it has also made wrong reporting to the exchanges and thus had failed to fulfill his duty in the proper collection and reporting of margins, as required under law,” said the Sebi order put up on the regulator’s website on Friday.
The regulator noted that the collection of inadequate margins has resulted in a violation of the law as has the collection of margins in modes which are not permitted. As a result, Sebi has barred SMC from involving itself in certain fresh activities for a period of three months.
“…hereby prohibit the noticee, SMC Global Securities Limited…from taking up any new assignment or contract or launch a new scheme for a period of three months,” said the order.
The regulator observed that SMC had created a situation which allowed excessive exposure to be taken by the trading members without means to support such exposure. This in turn could have affected clearing and settlement, it said.
The short fall in margin was said to have happened during the height of the financial crises, according to the show cause notice. It extended from March 2008 to June 2008 and September 2008 to November 2008.
