BSE gets an earful from SAT for denying payment to broker -29 MARCH

MUMBAI: The Securities Appellate Tribunal (SAT) has rapped the BSE on its knuckles for refusing to release payment due to Mumbaibased broker Keynote Capital, which sold shares after Prime SecuritiesBSE 0.32 % failed to meet the margin obligations due towards debit balance of the broke 

Coming down heavily on the BSE, SAT member A S Lamba observed, "......it is apparent that the BSE has vested interest in the matter and hence is not expected to do justice in the case. However, it may be mentioned that the undersigned has not gone into merits and contentions of any of the parties, in the present appeal, which is yet to be heard and decided and all contentions of parties are open, but yet it is of the view that no useful purpose will be served by referring the matter back to the BSE for reconsideration.

The matter has been remanded to the BSE to pass an order after giving a hearing to the broker. Prime Securities traded on the BSE as a client of Keynote Capital. After five months of trading through February 2013, Prime Securities had an outstanding debit balance with its broker. To realise its dues, Keynote sold the shares of ABG ShipyardBSE 3.91 % purchased by Prime earlier and adjusted its debit balance. The amount realised from the sale of shares in this case was around Rs89 lakh.


However, the BSE asked Keynote to transfer this amount to the exchange.

Despite a BSE Committee ordering the release of funds, the BSE transferred this amount to the Clearing Corporation on the ground that Prime Securities is a defaulter member.

Raising questions about the role played by the BSE, the SAT member in the order said, "Without going further into the matter, the undersigned is constrained to point out lack of promptitude, sensitivity, clock and dagger approach and  insidious manner of dealings of Respondent No. 1 (BSE) in the entire matter, which is not a healthy and fair way of conducting business by an organisation which claims to be pioneering in securities market in India and is a trendsetter for other stock exchanges in India and abroad."