Yet another freak trade in NSE derivatives segment

Worth manipulators within the by-product phase appear to be having a area day with incidents of bizarre or freak trades within the fairness futures and choices turning into extra frequent on the Nationwide Inventory Alternate. On Friday, by-product merchants witnessed a pointy spike in some choices contracts on the NSE. The decision choice contract for the NSE’s predominant index Nifty (16450 strike worth) for August expiry rose by 800 per cent from ₹100- ₹800. Equally, put choice contract for Financial institution Nifty index (37000) strike worth rose by 2000 per cent from a low of ₹1 to the touch a excessive of ₹2,040.

That is the third such freak commerce over the previous few months. On July 5, Nifty index futures surged 805 factors or over 5 per cent, with none comparable rise within the underlying money market. Weeks later, on July 28, Nifty futures for August expiry crashed 5 per cent or over 531 factors to a low of 15,256 from its opening 15,787. On all these events, the reversal to regular occurred in a number of seconds. When contacted, an NSE spokesperson stated, “The trade techniques functioned usually and all orders have been executed as per the working vary as prescribed by the trade.”

Uncommon worth actions

Brokers stated the frequency of such trades may very well be greater than only a coincidence. “Whereas market regulator SEBI has been focusing solely on manipulation within the money market phase and penny shares on the BSE, such extremely uncommon worth actions have gotten frequent on the NSE’s by-product phase and go unreported,” stated a dealer on situations of anonymity. Lately, the BSE got here beneath heavy criticism because the trade tried to curb manipulation by imposing circuit filters in money phase shares which can be solely listed on its platform. However brokers say that whereas money phase attracts draconian worth filters and surveillance measures, there may be nothing of such kind within the derivatives, leaving the sector open for manipulators.

SEBI has been investigating incidents of bizarre worth strikes and manipulation in illiquid by-product contracts on the NSE, however it’s but to make its findings public. Sources say, there have been inquiries carried out even by the Mumbai I-T division however the matter has not moved ahead because of the advanced nature of trades. The division was probing if these by-product trades have been for creating synthetic loss and avoiding taxes on income.