SEBI Develops System to Detect Misuse of Client Securities by Brokers
Market regulator Securities and Exchange Board of India (SEBI) has developed an in-house system to track and raise alert over movement of client securities collected as collateral by brokers. 
 
In a release, the regulator says, “SEBI has developed the in-house capabilities to track, online, the movement of client securities collected by the broker as collateral and raise alerts with exchanges if diversion of clients’ securities is noticed”.
 
In the recent past years, SEBI says it has observed that some brokers have misused clients' securities received as collateral to meet their own settlement obligation or obligations of other clients. Some brokers have also misused clients' securities by pledging them with the banks and non-banking finance companies (NBFCs) to raise funds for their own use. 
 
"Though the Depositories Act provides for acceptance of client securities as collateral by way of pledge, the collateral of securities is accepted by way of title transfer of securities by brokers. The client providing collateral in the form of securities needs to transfer his securities in the name of the broker and once the securities move out of the demat account of the client, it is not possible for him to keep a track of use or misuse of those securities by the broker," SEBI says.
 
SEBI says it collects the details of the clients' securities submitted in weekly report filed by brokers with the exchanges and updates the same with trades conducted in the accounts of said clients using the data available with SEBI in data warehouse & business intelligence system (DWBIS) as well as data provided by exchanges, clearing corporations and depositories pertaining to auction trades, corporate actions, stock lending & borrowing mechanism (SLBM) transfers, and off market trades. 
 
"The securities holding balance computed is matched with the actual clients' securities holding in the demat account and submission made by the broker for the next day. Any mismatch in data is flagged as an alert for exchanges," the market regulator says.
 
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.
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    COMMENTS

    ganesanjaicare

    1 week ago

    first sebi punish those for front running and insider trading.then they should introduce new regulations.

    SEBI Issues Notice to NSE Over Appointment of Anand Subramanian: Report
    Market regulator Securities and Exchange Board of India (SEBI) has issued show cause notices (SCNs) to the National Stock Exchange (NSE) over the appointment and promotion of Anand Subramanian, says a report from Business Standard.
     
    The capital markets regulator had issued its initial notice in October and a supplementary notice in December 2019.
     
    Quoting a disclosure from Exchange, the report says, "The NSE is in receipt of SEBI’s show cause notice… alleging violation in relation to certain alleged irregularities in the appointment of a chief strategic advisor and his re-designation as ‘group operating officer and advisor to managing director (MD)’ by the former MD and chief executive (CEO), and the sharing of certain internal information pertaining to the NSE with an alleged third party by the former MD and CEO.” 
     
    NSE has also filed a consent plea to settle the matter, the report added.
     
    In October 2016, Mr Subramanian resigned from NSE. Affirming the exit of Mr Subramanian, an official from NSE had told Moneylife, “He (Mr Subramanian) fore-closed his contracts and that has nothing to do with any other things.”
     
    In December the same year, Chitra Ramakrishna also resigned as MD and CEO of NSE over allegations of irregularities at the exchange’s co-location facility. Later SEBI Ms Ramakrishna and Ravi Narain, former MD of NSE, from holding any position in the management and/or in the Board of any Stock Exchange and/or Clearing Corporation or with any market intermediary or their related entity and/or with any company having its securities listed on any Stock Exchanges recognized by SEBI, for three years. 
     
    As per unconfirmed information, Anand Subramanian was paid Rs4 crore per annum as salary, which was the second highest remuneration paid by NSE at that time. Only the MD & CEO received higher salary (Rs7.87 crore gross/ Rs3.60 crore net) than Mr Subramanian.
     
    Earlier, on 1 April 2013, Mr Subramanian was appointed as advisory consultant on the NSE Board. "Mr Subramanian brings with him 21 years of rich experience and expertise in various fields and will facilitate advice in the areas as required from time to time from the office of MD & CEO," a note sent at that time by Chandrashekhar Mukherjee, head of Human Resources at NSE had said.
     
    Later he was re-designated as Group Operating Officer from 1 April 2015, as per communication from the MD & CEO's office. The note says, "... I propose to use the facility of our Chief Strategic Advisor (CSA) to reduce my burden. Considering the rich experience and guidance sought from CSA over two years, I propose to bring the following departments under his leadership and direct supervision, which will give me the space for concentrating on other initiatives." (Read: Subramanian Anand resigned from NSE)
     
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    Independent Director: Senior CA Resigns Citing Lack of Time to Study for MCA Proficiency Test!
    A chartered accountant (CA), with 30 years of experience, has resigned as independent director from a listed company citing lack of time to attend the affairs of the company and study and appear for the proficiency test as mandated by the ministry of corporate affairs (MCA). 
     
    CA Anjali S Dalvi has resigned from Jenburkt Pharmaceuticals Ltd as independent director on 7 February 2020. In her resignation letter she says, "I was given to understand that the MCA has made it mandatory for all independent directors to register themselves as also appear for a proficiency test thereafter. I am a CA qualified in January 1990 and I have a 30 year experience. I have also commenced my own venture since 2019. These activities are taking up most of my working hours and I am finding it difficult to attend to the affairs of Jenburkt (Pharmaceuticals) let alone find time to study and appear for tests. Considering the time at my disposal I am finding it difficult to comply with the new norms laid down by the MCA."
     
    Last year in October, MCA issued a notification making it mandatory for independent directors to get listed with a central database, and to qualify under proficiency test. The amendments become effective from 1 December 2019.
     
    Vinita Nair, who is company secretary (CS) and partner at Vinod Kothari & Co, feels the idea of the board report reporting their directors’ performance in the so-called proficiency test is even more bizarre.
     
    "While there is need for sensitisation on things like duties or liabilities of directors, accountability and responsibility by virtue of being a member of the company board, it cannot be a stuff for an online examination or proficiency self-assessment test," she said in an article. (Read: Will Independent Directors Pass the Common Proficiency Test as Proposed by MCA?)  
     
    There are training workshops and skill building courses for non-executive directors run all over the world, but that a director should mandatorily sign for one such test and qualify under the same with 60%, seems exceptional.
     
    In addition, the question of testing a person for any “proficiency” arises only when a director is expected to have such common proficiency. Normally, companies appoint directors who have core skills or expertise or competencies required for the business or sector. 
     
    The contents of the common proficiency test, such as company law, securities law and basic accountancy, seem to be eminently suited to corporate professionals.
     
    Corporate boards have to have diverse skills – technical, behavioural, industrial, and so on. How does a common proficiency test assess the capability, for example, of a person, who has technical competence on the line of business that the company is engaged in? Ms Nair asks.
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    COMMENTS

    suketu

    1 week ago

    After 30 yrs experience,Modi govt wants such experiences CA's to sit for an exam!

    adityag

    2 weeks ago

    This is how regulators make money -- pointless exams as a pre-requisite.

    Meenal Mamdani

    2 weeks ago

    So typical of Indian authorities.
    A test where none is needed.
    They should add a test for honesty and integrity too. May be they are afraid that some directors may not reach even 35%, the passing marks.

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