New Delhi: Market regulator Sebi has said that Anand Rathi Commodities and Geofin Comtrade are not "fit and proper" to act as commodity derivatives brokers in connection with the Rs 5,600 crore scam at the now defunct National Spot Exchange Ltd (NSEL).

Passing two separate orders, the watchdog has rejected the applications of Anand Rathi Commodities (ARCL) and Geofin Comtrade for registration as commodity derivatives brokers.

Both ARCL and Geofin Comtrade have also been directed to "cease to act, directly or indirectly" as commodity derivatives brokers, as per the two orders dated February 25.

On February 22, Sebi ruled that Motilal Oswal Commodities and India Infoline Commodities were not "fit and proper" to be granted registration to operate as commodity derivatives brokers.

The orders have come against the backdrop of the payment scam at the National Spot Exchange (NSEL) that came to light in 2013; and subsequently, many entities, including brokers, have come under the scanner of Sebi and other probe agencies.

In the separate but similarly-worded orders, Sebi said Anand Rathi Commodities and Geofin Comtrade, by virtue of being a broker, have facilitated transactions in the said paired contracts for its clients on the NSEL platform.

Both entities by their own admission allowed themselves to become a channel and instrument for NSEL to promote paired contracts amongst its clients, the watchdog noted.

The regulator said the allegations that they are not fit and proper rests on twin basis. One is the alleged violation of various laws and circulars with respect to the NSEL matter, and the second is the existence of various adverse observations by various courts/ authorities regarding the transactions in paired contracts on the spot exchange.

"We have noted Sebi's order related to ARCL. Sebi has observed that courts and authorities have made serious adverse observations against NSEL and paired contracts," Anand Rathi Commodities said in a statement.

"It states that even though such observations (against NSEL) are yet to established in a court of law, but by mere association of ARCL in the capacity of a broker with NSEL, the reputation of ARCL is affected and therefore the certificate of registration has been denied.

"We are examining the order and will take necessary legal steps to file appeal against the order. ARCL and its clients and employees are in fact victims of this fraud perpetrated by NSEL," it said, adding that the order rejects the application of registration of ARCL and has no impact on other businesses of the group.