sebi:WTM/ASB/MIRSD/DOP/29894/2023-24
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Facts / Headnote
Direction in paragraph 60 with consequential instruction to inform existing clients; Designated Authority had recommended cancellation of certificate of registration
Provisions invoked
- s. 19
- s. 12
- s. 29
- s. 12(3)
- s. 154
- s. 3(2)
- s. 29A
- s. 131B
Regulations
- Reg. 27
- Reg. 5
- Reg. 28(2)
- Reg. 9(b)
- Reg. 28(1)
- Reg. 5(e)
- Reg. 24(2)
Parties
- Aditya Commodities and Derivatives Pvt. Ltd.
Holding
The Noticee facilitated 'paired contracts' on NSEL which were in violation of the Exemption Notification and therefore failed to continuously satisfy the 'fit and proper person' criteria under Schedule II of the Intermediaries Regulations, warranting action under the Intermediaries Regulations including the direction in paragraph 60.
Full text
Order in respect of Aditya Commodities and Derivatives Pvt. Ltd. in the matter of NSEL Page 2 of 25 should be provided by NSEL to the Central Government or its designated agency.
Order in respect of Aditya Commodities and Derivatives Pvt. Ltd. in the matter of NSEL Page 3 of 25 5. Additionally, in respect of ‘paired contracts’, The FMC Order observed the following: a. Short Sale NSEL had not made it mandatory for the seller to deposit goods in its warehouse before taking a sell position. Hence, the condition of “no short sale by members of the NSEL shall be allowed” had not been met by NSEL and its trading/clearing members who had traded in ‘paired contracts’ during the relevant period. b. Contracts with Settlement Period going beyond 11 days Some of the contracts offered for trade on the NSEL had settlement periods exceeding 11 days and therefore, such contracts were “non-transferable specific delivery” contracts under the FCRA. As per the provisions of FCRA, the “ready delivery contracts” were required to be settled within 11 days of the trade being effected and hence, the contracts traded on NSEL, which provided settlement schedule for a period exceeding 11 days were not allowed and were in violation of the Exemption Notification.
Order in respect of Aditya Commodities and Derivatives Pvt. Ltd. in the matter of NSEL Page 4 of 25 7. Further, consequent to the merger of the FMC with SEBI, the FCRA was repealed. However, by way of a savings clause contained in Section 29 A of the FCRA, SEBI was empowered to initiate fresh proceedings with respect to offences under the FCRA within a period of three years from the date of repeal of the FCRA.
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Source: SecMarx — sebi:WTM/ASB/MIRSD/DOP/29894/2023-24. 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.