Indian Regulator To Take UBS Market Access Case To The Supreme Court

India's securities regulator is set to head to the country's Supreme Court after a tribunal overruled its ban on UBS issuing market-access derivative products.

  • 28 Oct 2005
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India's securities regulator is set to head to the country's Supreme Court after a tribunal overruled its ban on UBS issuing market-access derivative products. The Securities and Exchange Board of India move has surprised equity derivative players who are also concerned the ongoing saga involving UBS could drag other participants into the spotlight.

Last month UBS won an appeal against a May SEBI ruling banning the firm from offering market-access derivatives. The action rested on accusations UBS failed to fully disclose client identities in relation to a regulatory investigation into an equity market crash the previous year (DW, 7/16). The Securities Appellate Tribunal argued SEBI's know-your-client requirements were too vague and ruled in favor of the bank. An official at SEBI in Mumbai told DW the plan is to appeal the decision shortly with the Supreme Court, declining to further elaborate.

Market officials noted the regulator has until mid-November to contest the ruling. Although SEBI has made no formal announcement of the appeal, the move is the talk of the market. "This was quite a surprise," said an equity derivatives head at a top-tier firm, as many in the market had believed that the case was closed following the ruling last month.

If a court decision is in favor of SEBI, there are concerns other market participants could potentially be investigated to see if there have been similar problems. "This opens a whole new can of uncertainty," said another senior equity official. Another topic of concern is the current framework of the know-your-client guidelines, which market participants said need additional clarifications. "We're still in limbo," said an equity official.

The bank replied to DW's queries via a prepared statement: "UBS believes the appeal in the SAT was correct and is currently seeking legal advice on how best to respond to SEBI's appeal against the tribunal. In the meantime UBS continues to provide a full range of services to its clients in India."

  • 28 Oct 2005

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