Shares of Angel One, a discount stock broking firm, crashed 7 per cent to ₹1,581 a share after NSE levied a penalty of ₹1.67 crore on the company for not monitoring the activity of its authorised person’s (AP) activity.

The country’s largest exchange also prohibited the online broking firm from onboarding new APs for six months and directed it to conduct inspection on all its APs and submit a report in six months.

The exchange passed the order last Friday for the firm’s alleged failure to monitor the operations of its APs resulting in violation of the Capital Market Segment Regulations and Futures and Options Segment Regulations of the Exchange.

NSE directed Angel One to submit a detailed report on its investor grievance redressal mechanism comprising total investor complaints and arbitration matters registered against the company and its APs in the last one year including those pertaining to assured returns and unauthorised trading, total investor complaints and arbitration matters resolved in the last one year and pending investor complaints and arbitration matters.

Biz unaffected

However, Angel One said the order does not affect the existing business or the activities of the APs affiliated with the company. The company is evaluating various options available, including filing an appeal against the order, it said.

The company has always strived to and carried out its business in compliance with extant laws and regulations in letter and spirit, it added.

Angel One is the third largest discount broking firm with a market share of 14 per cent behind Zerodha and Groww which commands 20 per cent and 18 per cent market. Angel One reported a 2.2 per cent month-on-month increase in its client base to 4.4 million in June.

Swapnil Shah, Director (Research), StoxBox, said the penalty and order which prohibits the company from onboarding new APs for six months will not have materialistic effect on the business operations as the order does not affect the company’s existing business or activities of the APs affiliated with it. Moreover, he said the company can still pursue legal course against the order and the final outcome will still take some time, he added.

“With the recent robust quarterly results, expansion in financial services offerings, market share gain across retail overall equity turnover and NSE active clients and fortunes of brokerage industry closely linked with stock market performance, we remain positive on the company and believe today’s reaction is more sentiment-driven rather than any fundamental specific reason,” he said.

Related Topics