Stock brokers' association Anmi on Wednesday said it has requested NSE to withdraw the disciplinary action as it is harsh with respect to procedural incorrect submissions of data on client holding and cash and bank balances.

This comes following the rolling out of new penalty structure by National Stock Exchange (NSE) on brokerages submitting incorrect data on client holding and cash and bank balances.

As per the new penalty structure by NSE, a penalty of Rs 1 lakh will be levied in case of procedurally incorrect submission of client level holding statement, cash and cash equivalent balances and bank account balances.

In addition to that, a disablement of trading terminals for one day will be charged in case of material incorrect submission. The new penalty structure became effective from June 21.

“Anmi is of the view that the circular appears to be an outcome of erroneous presumptions and assumptions that the trading members deliberately submits incorrect data. The circular does not differentiate between intentional and unintentional submission of incorrect data,” the stockbrokers association said in its letter to NSE.

Raising a few concerns over the new penalty structure, Anmi stressed that reports are generated by the system and hence, there is always a scope of technological error.

Technical glitches on account of manual intervention could also attribute to the submission of procedurally incorrect reports, it added.

It, further, said, “levying penalty in a mechanical manner shall have a demoralising effect on large number of trading members who walk hand in hand with exchange and supplement the efforts of exchanges to make market a safe place for the investors.”

"There should be a relationship between the quantum and penalty and only in case of intentional misreporting penalty should be levied and not otherwise and disablement of trading terminal only if misreporting is repeated and in exceptional cases," Anmi said in the letter.

The brokers association suggested members should be provided with a window for rectification and submit reconciliation, and their explanation should be taken into consideration.

If the wrong reporting is due to any technical glitches or the interpretation of the rules, bylaws and circular of the exchange the same should be accepted and no penalty should be levied on the member, it said.

Association of National Exchanges Members of India (Anmi) is an association comprising around 900 stockbrokers from across the country who are members of NSE, BSE, Multi Commodity Exchange and other exchanges having national presence.