Capital market regulator SEBI has cancelled the stock broking licence of State-owned MMTC as recommended by designated authority in the National Spot Exchange case.
SEBI has directed MMTC to allow its existing clients to withdraw or transfer their securities or funds held in its custody in 15 days. In case of failure of any clients to withdraw or transfer their securities or funds, MMTC has to transfer the funds and securities of such clients to another broker under advice of the said clients in another 15 days, it said.
In its enquiry report, the designated authority in 2020 found that MMTC as a stock broker of the NSEL had facilitated trading in ‘paired contracts’ on the exchange platform of NSEL, which was in violation of the applicable provisions of erstwhile Forward Contracts (Regulation) Act, 1952.
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Continuance of MMTC as a stock broker is detrimental to the interest of the securities market and it is not a ‘fit and proper’ person to hold the registration as a stock broker in the securities markets, said the report.
However, MMTC contended that it is neither registered nor seeking to register with SEBI and thus, the present proceedings are not tenable.