Trading licenceThe woes for Karvy Stock Broking customers seems to have got worse. The National Stock Exchange of India Ltd (NSE) has suspended Karvy Stock Broking Ltd’s trading licence for all key segments due to non-compliance with regulatory provisions. Separately, BSE has activated trading terminals of Karvy in the equity segment & the debt segment.

“The National Stock Exchange of India Limited has suspended the following member (Karvy Stock Broking Limited) due to noncompliance of the regulatory provisions of the Exchange with effect from December 02, 2019 in the segments (Capital Market, Futures & Options, Currency Derivatives, Debt, MFSS and Commodity Derivatives),” said a NSE circular dated December 2, 2019.

Separately, BSE said: “Trading Members of the Exchange are hereby informed that pursuant to NSE Circular No.62/2019 dated December 2, 2019 informing that they have suspended M/s Karvy Stock Broking Ltd. w.e.f. December 2, 2019 due to non-compliance of the regulatory provisions of the Exchange, BSE has deactivated trading terminals of the Trading Member, Karvy Stock Broking Ltd. (Clg. No. 917) in Equity segment & Debt segment and put them in RRM (Risk Reduction Mode) mode in Equity Derivatives, Currency Derivatives and Commodity segment w.e.f. December 2, 2019.”

It is expected that other exchanges will take similar actions against Karvy.

With the NSE and BSE action, the fate of Karvy’s existing investors and their open positions is unclear. Hopefully, these exchanges will allow investors to square-off positions.

Market regulator SEBI recently passed an order against KSBL which partially restricted the broker from taking on new clients. Karvy, one of the largest retail brokerage houses in India, has faced a barrage of investor complaints in social media, following which the regulator passed the order. SEBI alleged Karvy had pledged clients’ shares and even sold a huge amount of them without their consent.

The disciplinary actions announced by the exchanges on Monday against Karvy Stock Broking seem to be in line with the regulator SEBI’s order, which had specified that the depositories and stock exchanges should initiate appropriate disciplinary regulatory proceedings against the notice for misuse of clients’ funds and securities as per their respective bye laws, rules and regulations.

You can read the SEBI order here.

Related:

3 things you should do if you are a Karvy Stock Broking customer

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.