Brokerage firms IIFL Securities and Axis Securities will acquire the accounts of Karvy Stock Broking after winning the bids conducted by exchanges and depositories.
While IIFL will get the demat accounts of Karvy with depositories NSDL and CDSL, Axis Securities will obtain the trading or broking accounts.
“IIFL Securities Ltd has emerged as the successful bidder for demat accounts held by Karvy with NSDL and CDSL. The said transfer of demat accounts is subject to the remittance of the bid amount and submission of the necessary documents in relation thereto,” IIFL said in a statement to the exchanges.
IIFL Securities will get more than 1.1 million demat accounts with the BSE, NSE and Metropolitan Stock Exchange (MSE) with assets worth ₹3.01 trillion under management.
“Once the process is complete, the customer base of Axis Securities will surge from 2.5 million to over 3.6 million,” a statement by Axis Securities said, adding that the transfer will help Karvy’s broking clients to continue with the access to securities market and have the benefits of Axis Securities’ trading platform.
On 6 February, the NSE, BSE and MSE issued a circular to transfer the trading and demat accounts held by Karvy Stock Broking Ltd to another member or participant through a formal bidding process based on certain prescribed eligibility criteria.
NSDL had said that the funds raised from the bidding will be utilized for the settlement of claims of investors of Karvy, after recovering the outstanding dues of market infrastructure institutions.
Karvy had misused power of attorneys from its clients to facilitate unauthorized transfer of clients’ securities to its demat accounts. In November 2019, markets regulator Securities and Exchange Board of India had barred the brokerage from taking new clients after it was found have to misused client collateral worth more than ₹2,000 crore for its own trades.