Brokerages will likely settle with the Securities and Exchange Board of India over the industrywide notice sent for association with Tradetron, an algo trading platform, sources familiar with the matter told NDTV Profit. This is being done to avoid the lengthy adjudication process to save time and resources.
However, formal settlement requests still need to be submitted to the regulator.
The development follows a notice issued by SEBI about a month ago to over 120 stockbrokers in connection with their involvement with Tradetron, which allows users to automate trading strategies.
SEBI's inquiry is centered around potential violations of its regulations, particularly a 2022 circular that prohibits brokers from partnering with platforms promising assured returns. Tradetron has reportedly been linked to some trading strategies that allegedly guaranteed profits, raising concerns of non-compliance with SEBI's stringent guidelines.
Brokerages named in the investigation include major players like Zerodha, Motilal Oswal Financial Services Ltd., Bajaj Financial Securities Ltd., and 5Paisa Capital Ltd. According to SEBI's regulations, specifically Regulation 9(f) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, brokers must adhere to a strict code of conduct, ensuring they do not associate with any entities offering guaranteed returns or engaging in potentially risky practices.
In such cases, a 30-day window is provided to the affected parties to file a settlement application after receiving the notice, with the possibility of a 15-day extension. As the deadline approaches, the brokerages involved are expected to take steps to resolve the matter before the time runs out, as per the people cited above.
Several other prominent brokerages had also received notices from SEBI regarding their association with Tradetron. These include major firms such as Aditya Birla Money Ltd., ICICI Securities Ltd., HDFC Securities Ltd., IIFL Securities Ltd., Angel One Ltd., Paytm Money Ltd., Sharekhan Ltd., Upstox Securities Pvt., Geojit Financial Services Ltd., Fyers Securities Pvt., and many more.
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