NOIDA, India, Feb 25, 2021 /PRNewswire/ -- Prime Minister Office on Tuesday sought response from Securities and Exchange Board of India (SEBI) on Wisdom Capital letter written recently with the prayer of intervention of Prime Minister regarding Impugned circular which mandates traders and investors to maintain minimum upfront margin in their accounts at all times during the day.
Department of Administrative Reforms and Grievance department of Union of India after going through the grievances raised in the letter, on February 23rd registered the grievances/complaint raised by the Wisdom Capital and sought response from SEBI regarding its circular.
Debu Prasad Mukherjee, CEO Wisdom Capital has recently wrote an open letter to Prime Minister office regarding the SEBI's said circular and apprised that how this new rule will be impact on the functioning of the stock market. It would be evident that stock market was the only sector that has been able to function since the lockdown began in India. It was only the stock market which provided numerous opportunities to many people facing job losses to survive in these pandemic times, letter stated.
"The circular infringes on the constitutional rights of the investors, brokers, and companies directly involved in the financial markets" read that letter.
According to the grievances raised in open Letter to PMO, SEBI has put in place a framework which makes it mandatory for stockbrokers to collect peak margin from the clients in a phased manner, effective from 1st December, 2020. SEBI has directed the stockbrokers to collect upfront margins from clients in the cash market and levy a penalty in case of short collection of margins vis-a-vis peak margin requirements during the day. There has been no benchmark in the world that prompts such an action from SEBI. Without consulting the broking industry stakeholders, SEBI has come up with these guidelines. As many authorities believe, a proper research, analysis and synthesis of the argument in consultation with industry bodies should have been done before the random issuance of the framework. Given that India was going through a complete lockdown, even the timing of the circular is questionable. Unfortunately, these steps have deformed the basic fabric of the markets; these are not only unconstitutional but also against the interests of the retail investors and are more inclined to help the cause of wealthy business participants.
Wisdom Capital, an online marketing and stockbroking services provider has recently also knocked the doors of Delhi High Court challenging circular which mandates traders and investors to maintain minimum upfront margin in their accounts at all times during the day. The Delhi HC also had issued notice in the matter to SEBI and fixed the matter for detail hearing 07 March 2021. The Circular will have a direct impact on the livelihood of many retail traders. There is an apprehension that if the volumes in derivatives deplete it will have an adverse effect on the corrections as there will be huge drop in GST, STT and stamp duty revenues on derivatives trades, plea in Delhi HC stated.
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