Debenture trustees cannot act as trustee for digital gold: Sebi

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November 03, 2021 6:05 PM

The latest directive comes after it came to the notice of Sebi that some registered debenture trustees are undertaking activities related to unregulated products such as acting as a trustee for digital gold.

The direction came after the capital markets regulator noted that certain members are providing a platform to their clients for buying and selling digital gold.The direction came after the capital markets regulator noted that certain members are providing a platform to their clients for buying and selling digital gold.

Capital markets regulator Sebi on Wednesday said debenture trustees are not allowed to act as a trustee for unregulated products such as digital gold.
Earlier, the regulator had restrained investment advisers and stock brokers from dealing in digital gold.

The latest directive comes after it came to the notice of Sebi that some registered debenture trustees are undertaking activities related to unregulated products such as acting as a trustee for digital gold.

The regulator said that undertaking activities related to unregulated products such as digital gold is not in accordance with the provisions of Sebi (Debenture Trustees) Regulations. Accordingly, “debenture trustees are, hereby, advised to disassociate themselves from undertaking activities related to unregulated products such as digital gold,” Sebi said in a statement. It, further said any dealing in activities related to unregulated product by debenture trustees may entail action as deemed appropriate under the Sebi Act 1992 and regulations framed thereunder.

In October, the Securities and Exchange Board of India (Sebi) had asked investment advisers to refrain from dealing in digital gold. In August, National Stock Exchange (NSE) had directed its members, including stockbrokers, to discontinue the sale of digital gold on their platforms by September 10.

The direction came after the capital markets regulator noted that certain members are providing a platform to their clients for buying and selling digital gold.
Sebi had informed the exchange that the said activity is in contravention of Securities Contracts (Regulation) Rules (SCRR), 1957, and the members should refrain from undertaking any such activities.

The SCRR rules restrict all members from engaging, either as principal or employee, in any business, other than that of securities or commodity derivatives, except as a broker or agent, not involving any personal financial liability.

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