The Securities and Exchange Board of India (SEBI), in a press release, notified the debenture trustees not allowed to act as a trustee for unregulated products such as digital gold.
In a release, SEBI says, “It has come 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. Undertaking activities related to unregulated products such as digital gold is not in accordance with the provisions of Section 12(1) of the SEBI Act, 1992 read with the SEBI (Debenture Trustees) Regulations,1993.”
“Debenture trustees are, hereby, advised to disassociate themselves from undertaking activities related to unregulated products such as digital gold,” the market regulator says.
“Any dealing in activities related to the unregulated product by debenture trustees may entail action as deemed appropriate under the SEBI Act, 1992 and regulations framed thereunder,” the SEBI added.
In other words, the 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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