What is Sebi’s new NSEL settlement scheme, and how will it benefit stock brokers?

Market regulator Securities and Exchange Board of India (Sebi) on Wednesday introduced a one-time settlement scheme for stock brokers who traded on the now-defunct National Spot Exchange Ltd (NSEL) platform. The scheme, aimed at expediting enforcement proceedings under SEBI‘s jurisdiction, offers eligible brokers a chance to settle violations related to securities laws without prolonged litigation.

Sebi has approved a structured scheme for brokers who were registered or applied as trading/clearing members under SEBI’s 1992 Stock Broker Regulations and operated on the NSEL platform.

It has suggested dual criteria for monetary settlement in which the settlement amount will be calculated based on — one is the quantity of units traded in paired contracts and the second is based on traded value available in paired contracts: 1 basis point (0.01%) of traded value in paired contracts, subject to a minimum of Rs 5 lakh.

— If the quantity involved in paired contracts is then or equal to 25,000 units, the settlement amount will be Rs 1,00,000.
— Higher than 25,000 but less than 1,00,000, the settlement amount is Rs 1 lakh + Re 1 for each unit in a paired contract above 25,000 units.
— Higher than 1,00,000, The settlement amount will be Rs 1.75 lakh + Rs 0.50 for each unit in paired contracts above 1,75,000 units, subject to a maximum of Rs 5 lakh.
The total payable is the sum of both these components, with a cap of Rs 5 lakh under quantity-based calculation.

Brokers availing the scheme may also face voluntary debarment ranging from 1 to 6 months, adjusted for any prior suspension or restrictions already served.

Brokers named in charge sheets by agencies such as the Economic Offences Wing (EOW) or the Enforcement Directorate (ED) are not eligible. Defaulters with stock exchanges are also excluded.
Future charge sheet = Void settlement
If a broker avails the scheme and is later charge-sheeted by a law enforcement agency, the settlement becomes null and void.

The scheme applies only to violations of SEBI regulations. It does not interfere with proceedings by other enforcement agencies.

Sebi expects this move to reduce legal costs, ease regulatory burden, and allow swifter resolution—while still serving as a deterrent for future violations.

SEBI will continue enforcement actions against brokers who are either ineligible or choose not to opt for this scheme.

Also Read: Sebi eases delisting norms for PSUs with over 90% government holding

The NSEL scam, considered one of India’s biggest financial frauds, unfolded in July 2013 when the NSEL abruptly suspended trading in most commodities, exposing a Rs 5,600 crore default that impacted around 13,000 investors. NSEL, promoted by erstwhile Financial Technologies (India) Ltd (now 63 Moons Technologies), was set up for spot trading in commodities.

NSEL illegally offered paired contracts—buying and selling commodities with guaranteed returns over short durations, violating spot market norms.

These contracts were falsely backed by warehouse receipts that had no real stock. When the Forward Markets Commission (FMC) ordered a halt to these illegal contracts, the default was triggered.

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