The Association of National Exchanges Members of India (Anmi), an industry body for brokers, confirmed on Thursday that 21 trading members had submitted a written complaint against IL&FS Securities. The same was stated by Vijay Bhushan, president of the industry body.
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.