HYDERABAD: India’s two leading exchanges NSE and BSE on Monday delivered a one-two punch on beleaguered Karvy Stock Broking Ltd.
While NSE suspended Karvy for non-compliance of regulatory provisions of the exchange, BSE deactivated the trading terminal altogether, causing irrepairable trouble to Karvy that counts itself as one of the country’s largest discount brokerages.
In a statement, NSE said that Karvy was suspended from the capital market, futures and options, currency derivatives, debt, MFSS and commodity derivatives segments with immediate effect. Similarly, reacting to NSE’s drastic measure, BSE deactivated Karvy’s trading terminals in equity and debt segment and put them in RRM mode in equity derivatives, currency derivatives and commodity segment with immediate effect.
It means, investors won’t be able to take new positions on the bourses, but to avoid spreading panic among the 2.4 lakh-odd customers of Karvy, the exchanges are allowing them to square off existing trades, migrate existing demat accounts to other brokerages.
In other words, trading activity for investors will be business as usual, except new positions cannot be made. When contacted, a Karvy official said that the management was studying the orders and will respond later in the day.
The move comes days after the capital markets regulator SEBI rejected Karvy’s plea seeking modifications to the latter’s order dated November, 22 that prevented the brokerage from exercising the Power of Attorney on behalf of clients to square off trades.
Last Thursday, Karvy had moved the Securities Appelate Tribunal (SAT) seeking temporary relief from the SEBI order so as to honour clients’ payments. SEBI had also barred the brokerage from adding new customers based on NSE’s preliminary report alleging misuse of clients’ shares and illegal transfer of funds from clients’ accounts to its group businesses.