SEBI warns USE against monitoring lapses

The SEBI had noticed concentration of large trades and volumes,mostly by two trading members,at USE.

Written by Agencies | Mumbai | Published: May 12, 2012 11:52 am

Market regulator SEBI has warned the United Stock Exchange of India (USE) against monitoring lapses that led to concentration of currency trading in two entities,but did not impose any financial penalty on the bourse.

The Securities and Exchange Board of India (SEBI) while reviewing trading volumes across all currency trading platforms had noticed concentration of large trades and volumes,mostly by two trading members,at USE.

“It was observed that one of these two trading members had accounted for about 77-80 per cent of the total turnover,” it said.

Finding USE “negligent to certain extent” in the discharge of its functions and duties,the Sebi order said: “… while dealing with matters concerned with discharge of regulatory functions,there would be a few occasions where monetary penalty would be appropriate … given the nature of the lapses and the efforts made (in USE’s case) … penalty of warning would be appropriate in this case.

Earlier,SEBI had issued a show cause notice in December last year to the USE. In the notice it was alleged “that there was absence of robust surveillance system at USE,to monitor the trend of domination of trade or artificial boosting of exchange volumes by one trading member”.

USE in its reply had admitted that it had detected the concentration of the trades and that the same was reported to the erstwhile Managing Director and CEO T S Narayanasami.

However,the USE had said that as there was no evidence of any manipulative trading patterns considering the fact that concentration of trades is a usual occurrence for any exchange in its initial stages,the same was not acted upon by Narayanasami.

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