sebi:Order/BM/DS/2023-24/30186

SEBI · SEBI · 2024-01-30 · Barnali Mukherjee, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

SCN disposed of without imposition of penalty

Provisions invoked

• s. 15A
• s. 15
• s. 15H
• s. 15J

Regulations

• Reg. 6
• Reg. 26
• Reg. 9

Parties

• CNB Finwiz Private Limited

Holding

The Adjudicating Officer found that the Noticee did not violate Regulation 26(xix) of the Stock Brokers Regulations, 1992, nor Clauses A(1) and A(2) of the Code of Conduct for Stock Brokers, as the terminals were used by an approved user (Mr. Hemant Kumar) and the trades were for squaring off existing positions using approved multi-leg IOC strategies. The SCN was disposed of without imposition of any penalty.

Full text

Adjudication Order in the matter of CNB Finwiz Private Limited Page 2 of 15 and Clauses A(1) and A(2) of the Code of Conduct for Stock Brokers - Schedule II read with Regulation 9 of Stock Brokers Regulations, 1992.

Adjudication Order in the matter of CNB Finwiz Private Limited Page 3 of 15 6.3. However, upon verification of trade data as on November 06, 2023 from these terminals, following was observed. 6.3.1. Terminal ID 110002001460 - Three trades were carried out from this terminal as on November 06, 2023, i.e. date of inspection. Existing positions (created from 02-11-2023) had been squared off on 06-11-2023. 6.3.2. Terminal ID 110002001275 - Intraday transactions were also carried out during the day. 6.4. It was also observed that the intra-day trades from terminal 110002001275 pertained to the proprietary account of the Noticee, and therefore, the trades could have been squared off through other terminals of the Noticee where approved users were available. Despite this, terminal 110002001275 was used to execute the trades when the approved users were not available. 6.5. Thus, it was inferred that aforesaid two terminals were used by other than approved users. Further, the Noticee had allegedly provided incorrect submission that user of Terminal id – 110002001275 was on leave and only existing position was squared off by other users whereas intraday transactions had also been carried out during the day. 6.6. In view of the foregoing observations, it was alleged that the Noticee has not maintained high standards of integrity and has not been acting with due skill, care and diligence in the conduct of its business and has thus, violated the provisions of Regulation 26(xix) and Clause

Adjudication Order in the matter of CNB Finwiz Private Limited Page 4 of 15 7.1. All trades were executed using Algo trading software/Strategy, and they were duly approved by the Exchange. The trades contained in SCN cit. 23.02.2024 were conducted with the intention of managing risk and squaring off existing positions in accordance with the approved strategies of the exchange, without any intent to create fresh positions. 7.2. Terminal ID - 110002001460: The user associated with this terminal was on leave, and consequently, only the existing position (Created from 02.11.2023) had been squared off on 06.11.2023. The ID was closed at 09:17 A.M., and no further trades were executed throughout the day. 7.3. Terminal ID - 110002001275: The User associated with this terminal was on leave due to a medical emergency and only the existing position had been squared off on 06.11.2023. lntraday Transactions carried out during the day as a part of squaring off the existing positions and according to the duly approved strategy of the exchange. Copy of medical certificate of the user was enclosed in support of the submissions. 7.4. With respect to terminal ID 110002001275, it was submitted that User is a dealer employed with the Noticee and had an existing position with 87 Lakh margin but was on leave due to medical urgency. It is essential that, in the absence of the dealer, risk is managed on a real time basis otherwise it may lead to extraordinary losses. 7.5. It maybe noted that the dea

Source: SecMarx — sebi:Order/BM/DS/2023-24/30186. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.