SEBI Allows ICICI Securities To Settle Margin Trading Facility Violations Issue For Over Rs 80 Lakh

The Securities and Exchange Board of India allowed ICICI Securities Ltd. on Friday to settle the security law violations against it for an amount of over Rs 80 lakh.

The violations were particularly related to margin trading facilities. The regulator had previously alleged that ICICI Securities failed to comply with the agreed-upon terms under the Margin Trading Facility.

According to SEBI regulations, any unconfirmed pledge securities under MTF should be squared off by the next trading day (T+1). However, the company allegedly did not square them off and instead kept these securities in the Client Unpaid Securities Account or the pool account without pledging them. This violates multiple SEBI circulars and stock broker regulations.

Another issue that the regulator had brought up was that the software module responsible for liquidating shares was not functional from Nov. 11, 2022, to May 31, 2023.

Hence, the securities lying in the CUSA or pool account could not be squared off for MTF clients. This software glitch led to business disruptions, variances in operations, and non-compliance with SEBI regulations. Moreover, ICICI Securities failed to report this issue to the stock exchanges as per the SEBI mandates.

As per the SEBI order uploaded on the website, ICICI Securities allegedly provided incorrect data submissions regarding unconfirmed pledge securities under MTF.

"Hence, there was a malfunction in the software of the applicant, which led to business disruption/variance in the normal functions/operations/services of systems of the applicant resulting into a technical glitch during the period Nov. 11 2022–May 31, 2023, and the aforesaid glitch was not reported to the Exchanges," the order read.

However, ICICI Securities decided to neither agree nor deny these allegations and their settlement request was subsequently approved by SEBI's high-powered action committee.