Barclay's Bank Plc has discontinued sales of its iPath MSCI India Exchange Traded Notes after SEBI banned the Bank from trading in Offshore Derivatives.
SEBI, in its notice, has accused the london based bank of previously violating disclosure norms. It found irregularities in disclosures regarding four ODIs issued on 15 December 2006, with shares of Reliance Communications Ltd as underlying assets. Barclays had reported these as being issued to UBS AG when they were actually issued to Hythe Securities, an entity regulated by the UK’s Financial Services Authority. Subsequently, Sebi found that Hythe Securities had issued them to Pluri Emerging Companies PCC Cell E Emerging Markets Growth Fund.Sebi found Barclays Bank guilty of flouting rules, as issuers must report any onward issuance of ODIs.
The ban will be in effect till Barclays satisfies that it has put adequate systems, processes and controls in place to ensure true and correct reporting of its ODI transactions.SEBI has also directed Barclays to furnish a certificate from an auditor of International standing. Barclays has time till December 18, to repond to the notice.
The suspension may cause fluctuations in the trading value of such Notes.However, daily redemptions at the option of the holders of the Notes will not be affected by this suspension
iPath MSCI India Index ETNs are the second largest ETNs in India with an asset value of $1.1Bn. iPath notes made its debut in India in December 2006 and follow the MSCI India Total Return Index Among the index's 68 components, top holdings include Infosys Technologies Ltd., Reliance Industries Ltd., and Icici Bank Ltd.It had a daily indicative value of $62.36 as on December 12.
Barclays said last month it planned to double its investment banking team in India, where the benchmark stock index has surged 78% this year and sales of equity-linked derivatives totalled Rs1.25 trillion at the end of October.
