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Sebi to take action against CSE officials

The stock market regulator Sebi might initiate action against the officials of the Calcutta Stock Exchange on the basis of findings of an enquiry committee set up to probe the March payments crisis on the bourse.

A senior Bombay-based Sebi official said that the market watchdog was currently examining the report submitted to it by a team of officials sent to enquire into the reasons, which led to the payment crisis

The official said the report contained remarks about the functioning of the surveillance department of the exchange.

When specifically asked whether Sebi would initiate corrective measures to prop up the exchange to shore up its dipping trade volumes, the official evaded a direct reply. He said taking necessary action was a logical sequence.

The March payments crisis, which threw the exchange into a tizzy, had a serious fallout on stock markets nationwide.

The CSE faced a severe financial problem to meet the payment settlements as the Settlement Guarantee Fund was almost wiped out forcing the member brokers of the Board of the Exchange to resign.

The CSE authorities have already initiated action against a number of member-brokers responsible for the crisis declaring them defaulters and moving high court to attach their properties for recovery of dues.

The surveillance department of the Exchange came under severe criticism from member brokers who alleged that CSE authorities were granting preferential treatment to certain people by not switching off their terminals when they had failed to meet payment obligations and margin dues.

The head of the surveillance, however, had written to the CSE authorities even before the crisis that market operations department was not passing on relevant information to it for which terminals could not be switched off in case of defaulting brokers.

The surveillance head alleged that a separate margin section had been created which was not reporting to it. In such a case, any information relating to margin collections from brokers were conveyed to the ED, which was subsequently not passed on to the surveillance cell for taking necessary corrective action.

Some brokers also alleged that calculation of gross margin was not proper as per Sebi guidelines, and this had led to lower margin money realisation by the exchange.

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