A day after its commodity broking arm was declared unfit for derivative trading by market regulator SEBI, Indian Infoline Commodities (IICL) on Saturday said it is seeking legal advice to appeal against the order.
IICL is the commodity broking arm of IIFL. The company along with Motilal Oswal Commodities Broker was declared not "fit and proper" by SEBI as part of action in the NSEL case. The company is among 300 brokerage firms investigated by SEBI for violation of ruled in the National Spot Exchange Ltd (NSEL) scam.
"IICL is seeking legal advice about going in for appeal. We would like to clarify to all our stakeholders and clients that this order has no impact on businesses of other companies of IIFL Group," the brokerage said in statement.
The statement further said that IICL does not have any outstanding dues towards any clients and it does not have any proprietary position.
The order signed by Madhani Puri Buch, whole time member of SEBI, said: "I declare that the noticee (IICL) is not a fit and proper person to hold, directly or indirectly, the certificate of registration as commodity derivatives broker, and hereby, reject the application dated December 23, 2015 filed by India Infoline Commodities Limited for registration as commodity derivatives broker. The noticee shall cease to act, directly or indirectly, as a commodity derivatives broker."
SEBI has also ordered both Motilal Oswal and IIFL to transfer securities of all their clients and allow withdrawal within 45 days of the order.
NSEL did not maintain sufficient underlying stock on trades it allowed even as brokers sold lucrative contracts to investors.
This built defaults and resulted in the exchange denying payments worth Rs 5,600 crore in 2013.