MCX ordered to refund Ventura penalty after tribunal finds disciplinary error
India's securities appellate tribunal has ordered Multi Commodity Exchange of India to return a penalty it collected from Ventura Securities and to pay additional costs. The ruling follows MCX's acknowledgement that an official who signed the exchange's penalty order had already left its disciplinary panel months before the sanction was imposed.
Highlights
- Securities Appellate Tribunal ordered MCX to pay 100,000 rupees to Ventura Securities and refund approximately 17.7 million rupees including penalty and tax.
- MCX fined Ventura Securities 14.96 million rupees for a 27% position limit breach in natural gas options but penalty deemed void due to an ineligible committee signatory.
- Decision highlights scrutiny on MCX's disciplinary processes and may drive higher procedural standards for enforcement in India's commodity derivatives market.
Tribunal order and penalty dispute
As reported by Reuters, the Securities Appellate Tribunal has directed MCX to pay 100,000 rupees in costs to Ventura Securities and refund about 17.7 million rupees previously recovered from the trading member, including the penalty and applicable tax. A copy of the order is published on Wednesday.MCX's disciplinary panel had in September fined Ventura Securities Ltd 14.96 million rupees after one of the broker's clients exceeded position limits in natural gas options contracts by nearly 27% during trading on May 23, 2024. The tribunal says the penalty on Ventura is "unsustainable in law" after MCX acknowledges that one of the signatories had ceased to be a member of the committee in March, more than six months before the panel imposed the penalty.
Implications for exchange oversight
According to the order, a law firm representing MCX describes the issue as a "bona fide error". Regstreet Law Advisors, representing Ventura, argues that the exchange had not issued any alerts that the client had breached position limits in natural gas contracts.Spokespeople for MCX and Ventura do not immediately respond to requests for comment. The decision places scrutiny on exchange disciplinary processes and may reinforce procedural standards for enforcement actions in India's commodity derivatives market.
Our earlier analysis of India’s disinvestment programme explained that proceeds since FY2016 have been dominated by market-linked routes such as ETFs, public issues and buybacks, while strategic sales contributed only a small share. We also noted that the pending IDBI Bank stake sale stands out in size and could materially improve the government’s ability to meet its annual disinvestment target.
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