Mumbai, Oct 13 (IANS) The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 2 lakh on IIFL Capital Services for violating regulatory requirements governing the operation of its online bond platform, according to an adjudication order issued on Tuesday.
The market regulator found that the company had failed to route trades in listed debt securities through the prescribed Request for Quote (RFQ) platform and had offered securities belonging to third-party sellers without executing mandatory agreements with them.
SEBI’s inspection covered the period from July 26, 2024, to March 31, 2025. During the review period, IIFL Capital Services executed 280 trades worth Rs 9.59 crore through its online bond platform.
According to the order, the company transferred securities to clients through off-market transactions instead of routing listed debt security trades through the RFQ platform, as required under the regulatory framework.
In its response, IIFL Capital Services attributed the practice to limitations in its existing platform and said it was in the process of developing a new platform.
SEBI observed that the regulatory framework and operational guidelines for online bond platform providers (OBPPs) had been introduced in November 2022 and that IIFL Capital Services received approval to operate as an OBPP on July 26, 2024. The regulator held that the company was expected to comply with the applicable requirements from the time it commenced operations under the framework.
The regulator also noted that IIFL Capital Services had not entered into written agreements with several third-party sellers whose securities were being offered on its platform.
These entities included Kanjalochana Finserve Pvt Ltd, Smest Capital Pvt Ltd, Tipsons Financial Services Pvt Ltd, Tipsons Consultancy Services Pvt Ltd and PhillipCapital (India) Pvt Ltd.
SEBI said the agreements were executed only after the inspection team highlighted the lapse.
The regulator reiterated that online bond platform providers are required to maintain written agreements with third-party sellers clearly defining their rights, liabilities and obligations.
In its defence, IIFL Capital Services argued that the agreements were subsequently signed and cited differences in regulatory interpretation.
The company also said that GoldenPi Technologies Pvt Ltd, which developed and licensed the platform, already had agreements with the sellers.
However, SEBI rejected the argument, stating that such arrangements did not absolve IIFL Capital Services of its independent obligation to enter into separate agreements with third-party sellers whose securities were listed on its platform.
–IANS
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