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NSE, BSE Suspend Karvy Stock Broking’s Licence Due to Non-compliance of Provisions

Leading bourses National Stock Exchange of India (NSE) and BSE on Monday suspended the licence of Karvy Stock Broking Ltd following non-compliance of the regulatory provisions of the exchanges, effective December 2.

Karvy has been suspended in capital market, futures and options, currency derivatives, debt, mutual funds service system (MFSS) and commodity derivatives segments, NSE said in a statement.

BSE, too, said in a notice, “BSE has deactivated trading terminals of the trading member, Karvy Stock Broking Ltd, in equity segment and debt segment and put them in RRM mode in equity derivatives, currency derivatives and commodity segment w.e.f. December 2, 2019.”

The move comes two weeks after the Securities and Exchange Board of India (Sebi) banned Karvy Stock Broking from taking new client and executing trades. Sebi had said the unauthorized use of clients’ funds created a serious doubt over the conduct and integrity of the brokerage firm.

NSE had recently forwarded a preliminary report to Sebi on the non-compliances observed with respect to the pledging/misuse of client securities by Karvy Stock Broking.

NSE’s preliminary report is the result of the limited purpose inspection of Karvy Stock Broking conducted by the exchange on August 19, covering a period from January 1 onwards, Sebi had said in an order.

Sebi had said that this is one of the biggest cases of broker defaults in the equity segment and despite numerous regulations, the fact remains that clients’ money and securities were brazenly misused for its own purposes by Karvy Stock Broking.

The defaults are to the tune of Rs 2,000 crore and, in an ex-parte order, Sebi has directed that pending forensic audit, Karvy Stock Broking is prohibited from taking new clients with respect to its stockbroking activities. The regulator had also directed NSDL and CDSL not to act upon any instruction given by Karvy in pursuance of power of attorney given by its clients.

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Source: News18