SEBI Cancels Registration Of 39 Stock Brokers, 7 Commodity Brokers, And 22 Depository Participants For Non-Compliance

The cancellations were primarily driven by the fact that these entities were no longer actively participating as members of recognized stock exchanges or depositories. SEBI noted that the action was necessary to prevent these entities from misusing their registration status, which could potentially harm unsuspecting investors.

The cancellation of these registrations, however, does not absolve the entities from their past responsibilities. SEBI clarified that these brokers and depository participants remain accountable for any actions taken or omitted during their tenure as registered entities. They are also required to settle any outstanding dues, fees, or interest owed to SEBI. This includes obligations related to the maintenance and preservation of records, redressal of investor grievances, and continuity of service to their clients.

SEBI referred to the provisions under the SEBI Broker Regulations of 1992 and the Depository Participants (DP) Regulations of 2018. According to these regulations, stock brokers must maintain membership with a recognized exchange, and depository participants must maintain an active affiliation with a depository. The 39 stock brokers whose registrations were cancelled were found to have failed this requirement as they were no longer members of any stock exchange.

Similarly, the registration of seven commodity brokers was annulled for similar reasons. These brokers were also required to meet specific conditions under SEBI regulations to retain their registration.

In addition to stock brokers and commodity brokers, SEBI also cancelled the registrations of 22 depository participants. These participants were required to be affiliated with recognized depositories to maintain their registration status. The cancellation of their registrations occurred because they were no longer affiliated with any depository, thus breaching the criteria established under the DP Regulations of 2018.

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