NCDEX to impose Rs 1 lac/case penalty on members offering PMS

Business

oi-Staff

By Super

Published: Tuesday, October 15, 2013, 15:29 [IST]

Leading agri-commodity bourse NCDEX today said it will impose a penalty of Rs 1 lakh per case on members who are found indulging in offering fund-based portfolio management services (PMS).

The exchange has issued a circular in this regard following the direction from the commodity markets regulator Forward Markets Commission (FMC) after brokers were found illegally offering such services at National Spot Exchange Ltd (NSEL) platform.

"Members are advised that if they are found indulging in offering fund-based PMS, the exchange shall take strict disciplinary actions such as deactivation of terminal, suspension from membership and in addition, such Members will also be liable for a penalty of minimum of Rs 1 lakh per case," the NCDEX circular said.

In addition to fund-based PMS activities, NCDEX said members are not allowed to indulge in any activity in the nature of promise of assured returns after a certain fixed-time period or assured profits by the member or profit-sharing activities.

Members are not permitted to do any activity without executing 'Member Client Agreement' or completing uniform client registration formalities. Also, they are not allowed to do any activity without providing the client with a risk disclosure document and without proper orders from the client for managing his accounts and executing trades.

Also, members are not allowed to advertise and publicise highlighting only the benefits of futures market without highlighting the risks involved.

They are also not permitted to do any other activity which is ambiguous or misleading the client in any way, the exchange added.

NCDEX is the leading agricultural commodity bourse in the country. It generated a business of Rs 41,641.85 crore in the second fortnight of September.

PTI