Jan. 16 -- Societe Generale SA’s Indian unit was ordered to stop selling or trading offshore derivatives by the nation’s capital markets regulator, which said the bank failed to provide fair and complete information about its trades.
The Securities & Exchange Board of India gave Societe Generale, France’s second-largest bank, 30 days to reply or file an objection to the order, according to a statement posted on its Web site yesterday.
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The Paris-based company is the second overseas bank to be suspended from trading derivatives by the regulator in just over a month. Barclays Plc suspended sales of its exchange- traded notes linked to Indian stocks following a Dec. 9 order. Both banks gave incorrect details on the sale of so-called participatory notes, the regulator said.
“Societe Generale completely failed in obtaining correct and complete information from the counterparties it deals with,” the regulator’s statement said. “Societe Generale is required to show cause as to why appropriate proceedings including cancellation of its certificate of registration as a foreign institutional investor should not be initiated.”
Laurent Tison, a Hong Kong-based spokesman at Societe Generale, didn’t immediately return phone calls made to his office today. Jonathan Williams, Barclays Capital’s Singapore- based spokesman, didn’t answer calls made to his mobile phone after hours. Barclays said on Dec. 9 that it was cooperating fully with the regulator.
Reliance Shares
Both banks reported incorrect data on transactions involving instruments linked to shares of Reliance Communications Ltd. to Hythe Securities Ltd., according to the regulator’s statements.
Derivatives are securities whose value is derived from an underlying asset such as stocks, bonds, commodities or currencies. Participatory notes are derivatives used by foreign investors to buy Indian stocks.
The iPath MSCI India Index Exchange Traded Notes, whose sales were discontinued by London-based Barclays, were the second-largest exchange-traded product linked to Indian equities, with assets of $1.1 billion
