In a major nationwide crackdown on the dabba — or illegal parallel market — trade, the Securities and Exchange Board of India (Sebi), along with the National Stock Exchange (NSE), has carried out enquiry operations on an NSE member over the past few days.The enquiry by the regulator and the stock exchange was carried out on Bansal Sharevest Services Pvt Ltd at its two offices situated in Mumbai, along with its other offices located at Bhuj (Gujarat), Kolkata, Mathura (Uttar Pradesh) and Bangalore. CRACKING THE WHIP • Offices of NSE member at Mumbai, Bhuj, Kolkata, Mathura, Bangalore scrutinised • Dabba trade has been rampant in several states as it offers a compliance-free environment • Sebi had written to state governments urging them to crack down on dabba • Several towns in Gujarat are in the grip of illegal dabba trade • Turnovers did not rise despite rally because of influence of illegal trading Sebi officials, along with officials from NSE, were carrying out enquiry operations at the broking firm’s offices in south Mumbai even on Tuesday. Sources said several documents were being analysed by the inspection teams. It is not yet clear what action the regulator will now take against the firm, but the nationwide crackdown itself is aimed at sending signals to the market that Sebi will not tolerate illegal trading of any kind.When contacted, Pradeep Kumar Bansal, director, Bansal Sharevest Securities Pvt Ltd, said that a Sebi enquiry was on and said, “Sebi and NSE officials are carrying out some enquiry which is routine in nature. No other agency officials besides Sebi and NSE officials are present at our offices”. He also confirmed that a similar enquiry was going on at other offices of the brokerage firm across the country.So rampant is the dabba trade in Bhuj, that when the Sebi team swooped down on the building there, nearly all inhabitants were reported to have run away, fearing an extensive crackdown by the regulator. This, sources point out, is an indication that there are other entities too which deal in dabba trade who had fled the scene fearing action. It may be recalled that Sebi had written to all state governments recently to initiate action against such trading practices as it was brought to its notice that some of the entities who are not registered with it are involved in carrying out such activities. As regards action on Bansal Sharevest by Sebi, the regulator swung into action as the broking firm was a registered entity with Sebi.In the recent past, Sebi had in fact received many complaints pertaining to a parallel cash market being in operation in some parts of the country including some of the suburban areas of Mumbai. The complaints received by Sebi alleged that the majority of the operators involved in such operations were regular brokers of the recognised stock exchanges but to avoid the transparent mechanism insisted upon by regulatory authorities, they offer parallel trading to interested players. The dabba market flourished in no time as it offered a compliance-free environment both to the players as well as the providers of the service.According to market observers, dabba trading has spread very rapidly, particularly in the smaller towns of Gujarat and Rajasthan. The turnover from such trading was also scaling new heights as people who traded in this were not required to comply with minute details sought by Sebi. As a result of the lack of compliance requirements, the turnover registered by the dabba market is almost the same as that of the legal cash market and that is the reason, market observers said, that in spite of the current rally which saw a rise of more than 800 points in the cash market, the turnover in the cash market did not reflect the buoyancy.
