SEBI refuses to renew recognition of Magadh Stock Exchange

Mumbai, Sep 4 (UNI) A day after de-recognising the Hyderabad Stock Exchange (HSE), Securities and Exchange Board of India (SEBI), today refused the renewal of recognition of Maghadh Stock Exchange Ltd (MdhSEL) on account of major regulator lapses.

MdsSEL, which had violated SEBI regulations in the trading of shares of Bhoruka Financial Services Ltd in December, faced an inquiry by the market regulator.

The SEBI said the MdhSEL repeatedly acted contrary and in defiance of SEBI directives and guidelines issued from time to time.

''Over the years, there were major regulatory lapses that led to supersession of the Council of Management and suspension of trading on the floor of the exchange,'' the SEBI order said.

Citing an another reason, SEBI said the resources available with the MdhSEL in terms of men, material and capital are inadequate to function as a stock exchange.

In a order dated August 30, 2007, the SEBI has said '' MdhSEL neither provides a trading platform nor serves any public interest and has therefore ceased to perform the basic economic function for which it was set up''.

The SEBI order will come into force on September 19, 2007.

The SEBI directed the MdhSEL to transfer the funds available in its Investor Protection Fund and Investor Services Fund, to SEBI Investor Protection and Education Fund.

It has further directed the exchange it should set aside sufficient funds to provide for settlement of any claims.

Following the de-recognition of the MdhSEL, trading granted by SEBI also stands automatically cancelled, SEBI has said.

The SEBI has restrained MdhSEL from transferring or alienating any moveable or immoveable property of the exchange including Bank Accounts in any manner till further directions by SEBI in this regard.

The SEBI, which had conducted inspection of MdhSEL in October 2006, found 20 deficiencies in the functioning of the exchange including failure to appoint the Executive Director for its exchange, the SEBI said.

UNI