Arcadia had shortfall of funds of Rs 37.92 crore to meet the client payables as on December 31, 2020, which had subsequently increased to Rs 41.89 crore as on February 01, the exchange said. The brokerage has a shortfall of clients’ securities to the tune of Rs 24.06 crore, it said.
NSE alleged, in its order, that Arcadia was engaged in borrowing of securities from its clients not through SLBM (security lending and borrowing mechanism) platform of the exchange, but outside the framework of lending and borrowing that has been established by the capital market regulator Sebi and exchanges, incurring personal financial liability, thereby raising serious concerns on the safety and security of the assets of the investors.
“..it is evident that Arcadia has misused clients’ funds and securities which tantamount to unprofessional conduct by Arcadia and clear disregard of the SEBI/Exchange guidelines,” NSE said.
The exchange said Arcadia has failed to submit the information for off-market transfers to its clients and invocation of pledged securities by banks.
“The non-submission of the said information obstructs carrying on the inspection analysis which is necessary to verify the veracity of the compliance by Arcadia including the financial condition of Arcadia. Accordingly, Arcadia has failed in its obligation as a trading member to facilitate the inspection/offsite supervision by the exchange,” NSE said in its order.