SEBI bars Motilal Owal, India Infoline from commodity derivatives segment

The Securities and Exchange Board of India (SEBI) has declared Motilal Oswal Commodities Broker and India Infoline Commodities unfit to function as commodity brokers on account of their alleged role in the ₹5,6000000000 settlement scam at the National Spot Exchange Limited (NSEL) that came out in the open in July 2013. The SEBI orders assume significance as this is the first set of action against large brokerages alleged to have colluded with the spot exchange for marketing of so-called pair contracts wherein clients were assured fixed returns. According to the SEBI order, the two entities "facilitated transactions in the said paired contracts for its clients on the NSEL platform" that establishes a close connection between the brokers and the exchange. "Reputation is an important factor for consideration of Fit and Proper criteria and the reputation of the Noticee has been seriously eroded. Thus I find that the Noticee is not a fit and proper person to be granted registration / to operate as a commodity derivatives broker," stated the SEBI orders.