SC notice to broking firm on inclusion of debt market trade in turnover
The Supreme Court on Monday issued notice to a stock brokerage firm on the legal question of whether the value of sale and purchase of securities in the wholesale debt market (WDM) can be included in the annual turnover of the stock brokers.
By Sanjay K Singh, TNN |
NEW DELHI: The Supreme Court on Monday issued notice to a stock brokerage firm on the legal question of whether the value of sale and purchase of securities in the wholesale debt market (WDM) can be included in the annual turnover of the stock brokers.
Such inclusion will compel the stock brokers to pay a registration fee on the wholesale debt segment to market regulator Sebi. Earlier, the SAT had ruled such wholesale transactions should not be included as part of the broker’s turnover. Sebi appealed in the Supreme Court against the SAT order.
The bench comprising Justice GP Mathur and Justice LS Panta sought explanation as to why SAT order is not to be stayed. The tribunal had set aside the order of Sebi which had imposed the fee on the turnover of ICAP India, a stock broking firm in respect of WDM segment trading. SAT has ruled that as it is not part of their annual turnover, the market regulator is not empowered to charge the fee.
The court granted the respondent (broking firm), a member of the NSE and registered with Sebi, four weeks’ time to reply. Sebi through its counsel Bhargava Desai has sought inclusion of the value of the securities in the annual turnover of the stock-broker and their liability to pay the registration fee.
As per the Sebi regulation, it is not necessary that broker should receive the payment in order to compute the annual turnover, said Desai. SAT had said the broker has a limited role to play in Wholesale Debt Market segment compared to the equity market. Their role is to bring the buyer and seller together in the WDM rather than to ensure that buyer gets delivery of the securities and seller receives the payment as done in the equity market, said tribunal in its August 14 order.
Challenging findings of the tribunal, Sebi in its appeal has said, “SAT failed to appreciate and examine and consider that there is no difference in principle between a stock broker mediating in sale of shares and sale of government securities.”
“The role of the broker is to bring together a willing seller and buyer so that they may purchase/sell the shares or securities. In either event, he brings about the sale for which he is paid a brokerage,” said the appeal.
SAT had relied on a circular issued by RBI but failed to appreciate that it is applicable to the banks dealing in securities through the brokers, said Sebi.
“Even if the RBI circular exempts the brokers who are dealing in WDM segment from computing their turnover fee, it can be considered for computing the turnover fee of the broker by invoking regulations,” added Sebi in its appeal.
Such inclusion will compel the stock brokers to pay a registration fee on the wholesale debt segment to market regulator Sebi. Earlier, the SAT had ruled such wholesale transactions should not be included as part of the broker’s turnover. Sebi appealed in the Supreme Court against the SAT order.
The bench comprising Justice GP Mathur and Justice LS Panta sought explanation as to why SAT order is not to be stayed. The tribunal had set aside the order of Sebi which had imposed the fee on the turnover of ICAP India, a stock broking firm in respect of WDM segment trading. SAT has ruled that as it is not part of their annual turnover, the market regulator is not empowered to charge the fee.
The court granted the respondent (broking firm), a member of the NSE and registered with Sebi, four weeks’ time to reply. Sebi through its counsel Bhargava Desai has sought inclusion of the value of the securities in the annual turnover of the stock-broker and their liability to pay the registration fee.
As per the Sebi regulation, it is not necessary that broker should receive the payment in order to compute the annual turnover, said Desai. SAT had said the broker has a limited role to play in Wholesale Debt Market segment compared to the equity market. Their role is to bring the buyer and seller together in the WDM rather than to ensure that buyer gets delivery of the securities and seller receives the payment as done in the equity market, said tribunal in its August 14 order.
Challenging findings of the tribunal, Sebi in its appeal has said, “SAT failed to appreciate and examine and consider that there is no difference in principle between a stock broker mediating in sale of shares and sale of government securities.”
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“The role of the broker is to bring together a willing seller and buyer so that they may purchase/sell the shares or securities. In either event, he brings about the sale for which he is paid a brokerage,” said the appeal.
SAT had relied on a circular issued by RBI but failed to appreciate that it is applicable to the banks dealing in securities through the brokers, said Sebi.
“Even if the RBI circular exempts the brokers who are dealing in WDM segment from computing their turnover fee, it can be considered for computing the turnover fee of the broker by invoking regulations,” added Sebi in its appeal.
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