SEBI Imposes Rs2 Lakh Penalty on SMC Global Securities for Unauthorised Trading Terminals

Moneylife Digital Team 22 August 2025

Investor Interest

Markets regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs2 lakh on SMC Global Securities Ltd for regulatory violations related to trading terminals at unauthorised locations.

In an order, Jai Sebastian, adjudicating officer (AO) of SEBI, stated that SMC Global Securities was under a statutory obligation to abide by the provisions of NSE circulars and Stock Brokers Regulations, which it failed to comply. “The said violations by the stockbroker attract a monetary penalty. Therefore, I feel it appropriate to levy a penalty which is commensurate with the nature of violation.”

SEBI, along with stock exchanges, conducted an inspection of SMC Global Securities on 18th and 19 June 2024. The findings were communicated to the broker in September 2024, to which SMC submitted its response later that month.

During the inspection on 18 June 2024, SEBI officials found that 20 out of 262 NSE CTCL terminals of the brokerage were not located at the addresses declared to the exchange. As per NSE regulations, stock brokers must strictly comply with location reporting requirements and unauthorised terminal usage attracts penalties.

SMC admitted that 19 terminals had been shifted between branches before NSE records were updated. The broker claimed that its branch mistakenly assumed such shifting requests became effective immediately, whereas, in fact, they take effect from the following trading day (T+1). The terminals were used from the new location on 18 June 2024 itself, with reporting to NSE done only later that evening, making the compliance appear like an afterthought.

For the 20th terminal, SMC explained it was a ‘view-only’ terminal linked to a payment gateway, registered nearly nine years ago and never used for trading. This explanation was accepted, and no violation was recorded for it.

However, the regulator held that the use of 19 terminals from unauthorised locations reflected a lack of due care and diligence, violating NSE circulars and provisions of the SEBI Stock Brokers Regulations.

In its order, SEBI relied on the Supreme Court’s ruling in SEBI v. Shriram Mutual Fund (2006), which held that once a violation of statutory obligations is established, a penalty follows irrespective of the violator’s intent.

Citing Section 15HB of the SEBI Act, which prescribes monetary penalties for contraventions where no separate penalty is specified, SEBI concluded that SMC Global Securities was liable for punishment. Accordingly, the regulator levied a penalty of Rs2 lakh.

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