ICICI Securities Settles Margin Trading Violations with Rs 80 Lakh Payment to SEBI

Synopsis

ICICI Securities has paid a settlement fee of over Rs 80 lakh to SEBI to resolve allegations of violating securities laws related to margin trading facilities. The company faced accusations of failing to comply with margin trading regulations and encountered operational issues due to a software glitch.

Key Takeaways

ICICI Securities paid Rs 80 lakh to SEBI.
Violations involved margin trading facilities (MTF).
Unconfirmed pledged securities were not squared off on time.
Software issues led to operational disruptions.
SEBI proposed new corporate governance regulations.

Mumbai, Feb 14 (NationPress) ICICI Securities has resolved allegations pertaining to breaches of securities regulations by disbursing a settlement fee exceeding Rs 80 lakh to the Securities and Exchange Board of India (SEBI).

The breaches were primarily associated with margin trading facilities (MTF).

The market regulator accused ICICI Securities of not adhering to the stipulated terms set for the margin trading facility.

In accordance with SEBI guidelines, any unconfirmed pledged securities under MTF are required to be liquidated by the subsequent trading day (T+1).

However, the firm allegedly neglected this requirement and retained these securities in the Client Unpaid Securities Account (CUSA) or the pool account without proper pledging.

This noncompliance breached several SEBI directives and stockbroker regulations. Moreover, a significant issue stemmed from a software malfunction within ICICI Securities' systems.

The component responsible for liquidating shares malfunctioned between November 11, 2022, and May 31, 2023.

Consequently, securities held in the CUSA or pool account could not be liquidated for MTF clients.

This technical disruption caused operational irregularities and a failure to comply with SEBI regulations.

Additionally, the market regulator discovered that ICICI Securities had allegedly submitted inaccurate information concerning unconfirmed pledged securities under MTF.

"Thus, there was a malfunction in the software of the applicant, which caused business disruptions and variances in the normal operations/services within the systems of the applicant during the period from November 11, 2022, to May 31, 2023, and this malfunction was not reported to the Exchanges," the directive stated.

Despite the allegations, ICICI Securities opted not to either admit or deny the charges. Instead, it sought a settlement, which was subsequently sanctioned by SEBI's high-powered action committee.

The settlement order has been made available on SEBI's official website.

In the meantime, the market regulator on February 9 introduced new regulations aimed at enhancing corporate governance among listed entities.

The proposed regulations emphasize revising the structure of the Annual Secretarial Compliance Report (ASCR), establishing eligibility criteria for auditor appointments, and introducing financial thresholds for the approval of Related Party Transactions (RPTs).