NSE Slashes Quantum Of Penalty On Brokers For Abnormal Trades

The National Stock Exchange on Tuesday decided to slash the quantum of fine imposed on stock brokers for "abnormal trades" executed on behalf of their clients.

The decision was taken following protest from trade bodies that were seeking a withdrawal of these fines citing impact on trade volume, market participants said.

"The exchange shall levy a penalty of 15 percent of the profit earned or loss incurred on the trading members for both profit and loss making abnormal or non-genuine transactions after following the due process and providing necessary opportunity to the trading member for clarification in the matter," NSE said in a circular.

The leading stock exchange in December 2018 had asked brokers to pay 100 percent penalty of the traded value for abnormal trades executed on behalf of their clients.

The NSE said the new guidelines will become applicable with immediate effect across all segments -- cash market, currency derivatives, equity derivatives and commodity derivatives market.

In addition, the exchange has also asked trading members to put in place requisite systems to monitor such abnormal or non-genuine transactions. The decision whether a trade is abnormal or non genuine rests with the exchange.

Also, it asked trading members to refrain from entering into abnormal or non-genuine transactions executed by the market participants, primarily with an objective of transferring profit or loss between the entities concerned or creation of artificial volume.