Market regulator Securities and Exchange Board of India (SEBI) has barred French financial services giant Soceite Generale from issuing fresh overseas derivatives instruments (ODIs).
ODIs are a type of participatory notes (PNs), for which entities have to, every fortnight, inform the regulator and update it about the firm’s transactions.
Stating Soceite Generale had violated FII norms and failed in its due diligence, SEBI barred the firm from transacting in ODIs till it provides correct reporting.
The regulator also issued a notice to the firm to “show cause why appropriate proceedings, including cancellation of its certificate of registration as an FII, should not be initiated”.
Soceite Generale issued to an entity, Hythe Securities, ODIs with shares of Reliance Communication as underlying, which were then issued forward to firms Opportunite SA and Pluri Emerging Co, SEBI said.
As per SEBI regulations, Soceite Generale was supposed to know the end beneficiaries of the transaction and when the SEBI called upon the firm to furnish details, it said Hythe was “not willing to part with the information” and that Hythe would provide the details directly to SEBI.
“It is abundantly clear, from the reporting stipulations on PNs, that FIIs issuing the ODIs/PNs are required to provide the name of the investor in case the same (ODIs/PNs) are issued onward to any other entity as a back to back instrument,” SEBI said.
“On the contrary, from the submissions and the documents provided by Soceite Generale, it appears that it had shirked its responsibility cast on it under the regulations, and has left it to its subscriber, Hythe, which is not registered and regulated by SEBI, to furnish the necessary information."
On December 9, SEBI had issued a similar directive to Barclays, which also involved a misreporting of transaction with Hythe with Reliance Communication shares as underlying.
Source: Moneycontrol.comCourtesy moneycontrol.com
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