Sebi Suspends Religare Commodities: Illegal Paired Contracts On NSEL

Sebi Suspends Religare Commodities Registration Over Alleged Illegal Paired Contracts on NSEL

The Securities and Exchange Board of India (Sebi) has suspended the registration of Religare Commodities, a brokerage firm, over its alleged involvement in illegal paired contracts on the now-defunct National Spot Exchange Ltd (NSEL). The suspension comes after Sebi found that the brokerage provided access for taking exposure to ‘paired contracts,’ exposing its clients to the risks associated with trading in a product lacking regulatory approval.

According to Sebi’s order, the trading activities of Religare Commodities in ‘paired contracts’ for its clients on the NSEL platform raised serious concerns, jeopardizing the competence and integrity of the brokerage in the securities market.

The suspension of Religare Commodities’ registration as a commodities derivative broker is effective immediately and will last for three months from the date of the order. Alternatively, it will continue until the FIR (First Information Report) filed against the broking firm by the Economic Offences Wing (EOW) ceases to be pending or until the notice is acquitted by a court regarding the FIR, whichever occurs later.

Sebi emphasized that the immediate implementation of the order aims to address the potential risks associated with Religare Commodities’ actions. The brokerage allegedly facilitated trading in paired contracts on the NSEL platform, a practice introduced in September 2009, allowing the buying and selling of the same commodity through two different contracts at different prices.

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The Sebi order highlighted that the scheme of paired contracts on NSEL resulted in a substantial loss of Rs 5,500 crore to investors. The regulatory body is taking decisive action to ensure the integrity and stability of the securities market and protect the interests of investors.

Investors and market participants are advised to exercise caution and stay informed about regulatory compliance when engaging in commodity trading, particularly in light of Sebi’s actions against Religare Commodities. The case underscores the importance of adherence to regulatory guidelines and the potential consequences for those who fail to comply.