The Securities Appellate Tribunal (SAT) has quashed a ₹1.77 crore penalty imposed by MCX on Ventura Securities, ruling that the order was signed by a former member of the exchange's panel. According to reports from The Economic Times, SAT held that MCX's September 28 order was legally unsustainable because S.V. Krishnamohan had ceased to be an independent external expert on the exchange's committee on March 20, 2026, much before signing the penalty order. The tribunal directed MCX to refund or reverse the amount debited from Ventura's account forthwith and pay the brokerage ₹1 lakh in costs. The ruling establishes that such conduct by a "first-line regulator" cannot be countenanced, as SAT refused MCX's request to waive the costs and ordered immediate refund of the entire amount.
The penalty dispute arose from alleged breach of client-level open position limits in natural gas options. As reported by The Economic Times, Ventura Securities had challenged the penalty imposed for an alleged breach of client-level open position limits in natural gas options. The brokerage argued that its client's position had reached 27% against a cited threshold of 2% and that MCX had not issued an alert regarding the breach. The tribunal's ruling on October 26, 2026, has now completely overturned this penalty order, with SAT specifically recording that MCX did not dispute Ventura's submission that the maximum penalty was ₹2 lakh under SEBI's September 9, 2026 circular.
The most striking aspect of the case was MCX's decision to impose a penalty nearly 75 times the prescribed ceiling of ₹2 lakh, despite not contesting this limit before SAT. According to The Economic Times, the total debit was ₹1,76,56,723.50, comprising the ₹1.49 crore penalty and applicable GST, representing approximately 88 times the regulatory ceiling. MCX collected this amount on October 14, 2026, even before the tribunal delivered its judgment, demonstrating the exchange's authority to collect money while appeals are pending. The tribunal's order establishes that this excessive penalty calculation, using near-month futures price methodology rather than option premium, cannot override the binding regulatory limit, making the distinction between penalty and brokerage fees economically significant but legally irrelevant.
The most controversial aspect was the appearance of S.V. Krishnamohan's signature on the disciplinary order despite his committee tenure ending on March 20, 2026, more than six months before the order was issued. As reported by The Economic Times, MCX's counsel Anubhav Ghosh conceded this was a "bona fide error" but sought to have the matter sent back for reconsideration. SAT refused this request, noting the order was "unsustainable in law" and that there was no substance in MCX's request for another opportunity. The tribunal's order establishes the tenure problem and records MCX's admission, but does not identify who prepared the order, who checked it, or who authorized its issue, leaving fundamental questions about accountability unanswered. For an exchange whose disciplinary decisions can have serious financial consequences for brokers, this procedural failure represents a significant institutional problem requiring immediate explanation.
