The Securities and Exchange Board of India (SEBI) has said that Anand Rathi Commodities and Geofin Comtrade (formerly known as Geojit Comtrade) are 'not fit and proper' for broking.

This will block their operations as brokers in the commodities derivative segment. The SEBI orders on Tuesday have come within days of similar ones against Motilal Oswal Commodities and India Infoline Commodities, which were passed on Friday.

A similar order is now expected against Phillip Capital, which was show-caused by the regulator last year.

The decision came against the backdrop of payment scam at the National Spot Exchange (NSEL) that came to light in 2013. Since then, about 300 large and small brokererage firms have come under the scanner of market regulator and other probe agencies.

The SEBI summarises that "brokers facilitated transactions in the said paired contracts for their clients on the NSEL platform, became channel and instrument for NSEL to promote paired contracts among their clients. In SEBI's eyes, mere association by way of a registered broker of NSEL is sufficient to lose reputation. All 300 brokers are contaminated in the same way."

SEBI has rejected the applications filed by Anand Rathi Commodities and Geojin Comtrade Limited on December 16, 2015 for registration as commodity derivatives brokers.

In the first show cause notice, SEBI said that the integrity, reputation and character of Anand Rathi Commodities and Geofin Comtrade are questionable from the conduct of their business at NSEL as commodity brokers.

"In view of the seriousness of the matter, facts and circumstances of the case, the conduct of the noticee in its functioning as commodity brokers is questionable and has certainly eroded its general reputation, record of fairness, honesty and integrity and has therefore affected its status as a fit and proper person."

Earlier, the SEBI on February 23 declared Motilal Oswal Commodities and India Infoline Commodities as not 'fit and proper' to be a commodities derivatives broker for their alleged role in the Rs 5,500 crore National Spot Exchange Limited (NSEL) scam in 2013.

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