Hi
@Dhanish,
Allied Financial has allegedly committed a fraudulent activity by pledging Navjoy Emporium Emporium & Dalmia Bharat's MF units and has taken short positions in their proprietary trading account in NIFTY/Bank Nifty Derivatives. The broker made losses and upon coming to know that MF units are pledged as collateral and will be liquidated to pay the obligation, Dalmia Bharat approached SEBI which has then guided them to file a complaint with the Economic Offences Wing (EOW). As a result, EOW has directed the MF units to be blocked and IL&FS (Clearing Member of Allied) has had to provision for the obligation using the cash collaterals which are deposited with the Clearing Corporation (NCL). IL&FS has responded and has asked for the annulment (Cancellation) of trades. The Securities Appellate Tribunal (SAT) has given its opinion on the entire episode here -
SAT Order.
In my understanding, the matter has to be resolved in one of the following ways:
- Trades have to be annulled.
- Trades have to be settled by NCL by way of Novation.
- Trades have to be settled by ISSL (Unlikely, as they have defaulted on the obligations recently).
SEBI and NSE must come together soon and resolve the matter before the faith in the markets begin to show cracks. The FIIs are already very pissed off about it as they and as many as 68 others are counterparties to the trade which is tue the tune of 300-400 Crores.