Sebi to curb illicit nexus between brokers, promotors

Capital markets regulator Sebi may soon frame a new set of norms to check illicit nexus between market intermediaries and promoters of listed firms, where shares are used informally as collateral for trades. Taking benefit from the regulatory gaps, some depository participants enter into tripartite arrangements with the promoters of listed companies and the traders for lending or borrowing of shares without using the formal pledging or encumbrance of such securities. However, such arrangements can lead to possible frauds and multiple pledging of shares and there have been cases where any default on part of any of the three parties has resulted into a massive fall in the share price — thus hurting the interest of minority shareholders. 

- See more at: http://www.kcctutorials.com/sebi-curb-illicit-nexus-brokers-promotors/#sthash.fplMX7hm.dpuf