Close to two dozen brokers were barred from buying shares on account of collateral shortfall at their clearing member, IL&FS Securities Services. A clearing member is responsible for providing collateral and margins on behalf of the brokers.
The brokers alleged that they had provided adequate collateral to IL&FS Securities, yet the exchange systems showed a deficit ahead of the opening trade.
“The exchange system showed a shortfall in collateral at IL&FS Securities. Most brokers who faced issues have provided enough margins. Looks like the issue with Allied Financial has spilled over, and on to others,” said a broker. Industry participants say the Allied Financial scam has impacted the functioning of IL&FS Securities.
Earlier this year, Allied Financial took positions in the derivatives market by placing fraudulently transferred mutual fund units worth Rs 365 crore — belonging to Dalmia Bharat Cement, OCL India and Novjoy Emporium — as collateral margin with IL&FS Securities.
Brokers said they want to opt for another clearing member. However, IL&FS Securities is not providing the required nod. For making a switch, a broker needs to obtain a no-objection certificate (NOC) from their existing clearing member. A broker can have only one clearing member at a time.
IL&FS Securities couldn’t be reached for comment.
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