Mumbai: Societe Generale'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 and 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 website.
The Paris-based company is the second overseas bank to be suspended from trading derivatives by the regulator in just over a month. Barclays suspended sales of its exchange-traded notes linked to Indian stocks following a December 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."
The French bank said in a statement that it's "cooperating fully" with the investigation and aims to provide all the information required within the 30-day period demanded by the regulator. Melody Jeannin, a spokeswoman in Paris, declined to comment beyond the statement.
Reliance shares
Jonathan Williams, Barclays Capital's Singapore-based spokesman, didn't answer calls made to his mobile phone after hours. Barclays said on December 9 that it was cooperating fully with the regulator.
Both banks reported incorrect data on transactions involving instruments linked to shares of Reliance Communications to Hythe Securities, 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.
