The Securities Appellate Tribunal (SAT) has stayed orders passed by market regulator Securities and Exchange Board of India (SEBI) against three brokerages and three senior officials of the National Stock Exchange (NSE) in the NSE co-location (Colo) or algo trading scam. However, the Tribunal has asked the brokers, GKN Securities, Way2Wealth Brokers Pvt Ltd and OPG Securities to deposit 50% of the penalty amount as security by 20 May 2019. The SAT also stayed SEBI order on barring three NSE officials from holding any position in any market intermediaries for two years. 

 

Last week, SEBI has barred OPG Securities and its directors Sanjay Gupta, Sangeeta Gupta and Om Prakash Gupta from the markets for five years for securing unfair access to NSE’s trading systems. They were also asked to pay Rs15.57 crore along with an interest of 12% from April 2014 onwards. 

 

Both Way2Wealth Brokers Pvt Ltd and GKN Securities were barred by SEBI for one year from accepting any new client. Way2Wealth was asked to pay a fine of Rs15.34 crore along with an interest at 12% from 10 September 2015, while GKN was fined Rs4.9 crore, which it was required to pay along with an interest of 12% from 11 September 2015. 

 

Last week, on Friday, SEBI has allowed the three brokerages to close their open positions in the futures and options (F&O) and currency derivatives segment within two months.

 

Separately, the Tribunal has stayed SEBI orders that barred Ravi Varanasi, who was head of the business development function at NSE, Nagendra Kumar (head of membership department) and Deviprasad Singh (head of Colo support) for two years from holding any position with a market player. 

 

According to sources, Ravi Varanasi, Nagendra Kumar, Deviprasad Singh and Suprabhat Lala, who at various times headed NSE’s vigilance, compliance, trading and customer relations, are not working with NSE. “While it is not known if the Exchange has issued any order or communication to these people as per the SEBI order, they have stopped working with NSE," the source tells us. 

 

Last week, the market regulator, in a marathon five-order series in the co-location case, came down heavily on NSE and its senior officials, including former managing directors Ravi Narain and Chitra Ramakrishna.

 

Mr Lala from NSE is barred from holding any position with any market infrastructure intermediaries for two years. Mr Varanasi, NSE’s chief of business development is barred from holding positions in market intermediaries and associating with listed companies for three years in the dark fibre case. 

 

Nagendra Kumar SRVS, head of NSE’s membership department and Deviprasad Singh, head for Colo support at the Exchange, are also barred from holding any position for the next two years. In addition, SEBI has asked NSE to initiate an enquiry under its employees’ regulation against Mr Singh and submit the report within six months.

 

The colocation or algo scam came to light in mid-2015, when Moneylife wrote about it for the first time, following multiple letters from a whistleblower. For this, NSE had filed a defamation case against us. A single-judge had penalised NSE for Rs50 lakh for having filed a case against us. After filing an appeal against the order, NSE paid up the penalty. Meanwhile, in the wake of the scam, the top brass of NSE had to resign and a new management team took charge.

 

Officials from SEBI were not immediately available for comment on the SAT stay orders.  

 

Next hearing in both these matters is scheduled for 22 July 2019.

Two years after the Real Estate (Regulation and Development) Act was enacted, the implementation of the legislation intended to bring about transparency and regulate the highly unorganised real estate sector still remains a work in progress.

 

The RERA rules have been notified in 22 states and six union territories, and among them 19 states have active online portals so far. 

 

Five states have not yet notified the rules and 11 states - all the eight northeastern states as well as West Bengal and Kerala - are yet to set up their web portals. 

 

Several states have also diluted the rules in favour of the builders, going against the very spirit of the Act, experts said.

 

"Undoubtedly, it is work in process, with the states currently placed across the spectrum of RERA implementation. On the one hand, Maharashtra and Madhya Pradesh have taken the lead and are markedly ahead, while Haryana and Bengal on the other, have still to catch up," said Gulam Zia, Executive Director for Valuation and Advisory, Retail and Hospitality at Knight Frank India.

 

West Bengal has refused to implement the Act as it has its own West Bengal Housing and Industrial Regulation Act (WBHIRA). This has, however, been challenged in the Supreme Court by the Forum for People's Collective Efforts (FPCE), an umbrella association of home buyers.

 

"The implementation of RERA has had its fair share of glitches delaying its full implementation. Many states haven't been able to get the whole system activated. As a result, aggrieved consumers are not yet fully convinced about the authority," Zia added.

 

According to Surendra Hiranandani, Founder and Director of House of Hiranandani, although the Act has brought about significant changes, the biggest probalem of RERA is that of granting permissions. 

 

"We must have a single-window disbursal of all regulatory approvals which has been a long-standing demand of the real estate sector as it will help developers complete projects on time," he said.

 

Experts also raise concern about the Act being ineffective in some fronts, including regulation of old projects.

 

"I believe RERA is effective when it comes to new projects. But for the old projects, I would still consider RERA a toothless tiger," said Samir Jasuja, Founder of Propequity, adding that RERA also lacks effective infrastructure. 

 

"There is no team on ground who would audit or validate the data provided by the developers. Some sales numbers reported on the RERA website are not correct and there is no proper mechanism to cross check it," he added.

 

Although there are loopholes and the implementation has been patchy, analysts and market players feel RERA has brought about a systemic change in the real estate sector which has also boosted the sentiments among home buyers.

 

"In the last two years, RERA has brought in some amicable change in the sector. Some of the changes we've seen in the sector are increasing joint ventures, developers registering their projects, timely hand over of flats and developers bringing in newer projects with cleaner business practices. All of these improvements have led to a boost in home buyer sentiments," said Parth Mehta, MD of Paradigm Realty.

 

According to J.C. Sharma, Vice Chairman and MD, SOBHA Ltd, the implementation of RERA, has been one of the most significant and transformative steps for Indian real estate sector. With regulatory mechanism in place, the consumers' grievances can now be resolved faster, he said.

 

The Act has enabled the developers to understand their responsibility and work within their competencies and as a result, they are increasingly becoming realistic in offering the right products at the right price point, Sharma said. 

 

"Despite the initial transitional challenges, the positive impact has been amply visible over the last two years with improving home buyer sentiments and increasing transparency and accountability in the sector," he added.

 

Anuj Puri, Chairman of Anarock Properties said that although several buyers are concerned about the dilution of the RERA rules, they continue to have faith in the law.

 

"Even while buyers have been continuously fretting about the dilution of the rules, they are bestowing their faith in the law and coming forward in bulk to raise their complaints against faulty developers for myriad reasons including project delays. For instance, Maha RERA has received as many as 6,631 complaints (as on April) since inception, out of which the state authority claims to have disposed more than 64 per cent of the complaints," he said.

 

Maharastra has been the torchbearer in terms of implementation of the Act and resolving home buyers' grievances. 

 

According to Anarocks, Maharashtra is currently the most active state having the highest project registrations with more than 20,718 projects under MahaRERA so far, and nearly 19,699 RERA-registered real estate agents.

 

However, the lagging of other states in terms of having a fully operational RERA structure with an operational website still remains concern, experts said.

 

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.