The Securities and Exchange Board of India (SEBI) has rejected the application for registration of commodity broking licence of Phillip Commodities India for its alleged role in the ₹5,600-crore settlement scam at the National Spot Exchange Ltd. (NSEL) that came out in the open in July 2013.
This is the fifth brokerage to face such action by the capital market regulator. Earlier, SEBI rejected similar applications by Anand Rathi Commodities, Geofin Comtrade, Motilal Oswal Commodities Broker and India Infoline Commodities.
In line with the earlier orders, SEBI has given Philip Commodities 45 days to allow all existing clients to move to other brokerages within 45 days.
According to SEBI, the brokerage is not ‘fit and proper’ to function in the commodity segment for its alleged role in facilitating so-called paired contracts for its clients on NSEL, which was forced to suspend trading in all contracts in August 2013 due to the absence of the underlying commodities to settle the contracts.
As per the SEBI probe, large brokerages colluded with the spot exchange for marketing of paired contracts wherein clients were assured fixed returns ranging between 13% and 16% per annum.
While nearly six years have passed since the NSEL scam came to light, the matter has been in the news recently with 63 Moons Technologies, which was formerly known as Financial Technologies India Ltd. (FTIL), initiating the process to file suits for damages, claiming ₹10,000 crore against former finance minister P. Chidambaram and senior bureaucrats K.P. Krishnan and Ramesh Abhishek for alleged abuse of their powers and mala fide actions against the company.
63 Moons is the parent entity of NSEL and was the subject of probes by various regulatory and investigative agencies.