Sebi cancels registration of Emkay Commotrade in NSEL case

Capital markets regulator Sebi on Friday cancelled the registration of Emkay Commotrade for facilitating its clients to trade in illegal 'paired contracts' on the National Spot Exchange Ltd (now defunct). "The noticee (Emkay Commotrade) by providing access for taking exposure to 'paired contracts' and did not have regulatory approval, thereby raises doubts on the competence of the noticee to act as a registered securities market intermediary.

"The actions of the noticee have been and could be detrimental to the interest of the securities market and accordingly the noticee can no longer be called a 'fit and proper person' for holding the certificate of registration as a broker in the securities market," Sebi's Executive Director VS Sundaresan said in the order.

The regulator has asked the broker to allow its existing clients or transfer their securities or funds held in its custody within 15 days.


In case of failure of any clients to withdraw or transfer their securities or funds within this period, the broker will transfer the funds and securities of such clients to another broker within a period of the next 15 days thereon, under advice to the clients.

In September 2009, NSEL introduced the concept of 'paired contracts' for trading, which allowed buying and selling of the same commodity through two different contracts at two different prices on the exchange platform.

The scheme of 'paired contracts' traded on the NSEL had caused a huge loss to investors to the extent of Rs 5,500 crore, as per the order.