The Hindu : Business : SEBI ban on Magadh Exchange

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Tuesday, Aug 23, 2005

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SEBI ban on Magadh Exchange

Special Correspondent

MUMBAI: The Securities and Exchange Board of India (SEBI) has passed an ex-parte order on Saturday last, banning the Magadh Stock Exchange Association (MSEA) from dealing in any securities and suspending the scrip Bhoruka Financial Services Ltd (BFSL) from all stock exchanges, including the Bangalore Stock Exchange (BgSE).

The order was passed under Sec. 12A of the Securities Contracts (Regulation) Act, 1956, Sec.11(4) and 11B of the SEBI Act, 1992 and Sec. 19 of the Depositories Act, 1996.

On August 10, it came to the notice of SEBI that, the MSEA had illegally commenced trading even though it had not complied with the conditions of renewal of the exchange, which inter alia required that trading on the exchange should commence only after the setting up of the settlement guarantee fund duly approved by SEBI.

SEBI immediately advised the MSEA to stop trading and called for the details of trades undertaken. On examination of the trading details it was found that the MSEA had illegally commenced trading since August 1 and out of the total trading volume of Rs. 109.71 crore, nearly 99 per cent of the trading volume, that is, Rs. 108.87 crore was in the scrip of BFSL. It was found that BFSL is listed only on the Bangalore Stock Exchange Ltd. (BgSE) and was last traded 17 years ago, in 1988 at Rs. 5 in BgSE. This scrip, which is not listed in the MSEA, was admitted to trade under the permitted category by MSEA on August 1, at the request of the broker Rajat Share & Stock Broker Pvt. Ltd..

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