New badla norms come into effect
Mumbai: Exactly a month after its board took a decision to this effect, the Securities and Exchange Board of India has notified changes to the carryforward or badla system which would allow brokers to take positions up to Rs 40 crore per settlement. As a result of this notification, which is with immediate effect, the 90-day limit on badla will also cease to exist. The revised norms will be applicable for the BSE from the coming settlement.

The new norms put a cap of Rs 5 crore per scrip on a broker. The overall limit would stand hiked from Rs 20 crore to Rs 40 crore now. The margin up to the Rs 20 crore limit will remain at the existing prescribed level of 15 per cent and the incremental position will attract an additional margin of 5 per cent.

However, according to Ms. Deena Mehta, the BSE vice president, the new norm is not expected to have any immediate significant impact of the move, because less than 10 per cent of the brokers actually have close to Rs 20 crore per settlement outstandings.

The decisions were recommended by the J R Varma panel, which had been set up to review the existing modified carryforward system and examine the introduction of carryforward system under rolling settlement.
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New software listings go the NBFC way
Mumbai: Much like the boom in the public issues of NBFCs’ in the early 1990s’, the rush of investors hoping to ride the infotech wave are already seeing their big dreams turn to dust.

A recent study of the new issues in the software sector, shows that a sharp price depreciation and liquidity problems have plagued many of the 80 infotech Initial Public Offerings which raised more than Rs 2,000 crore, and subsequently listed on bourses.

While most of these stocks are listed on regional exchanges, such as Bangalore and Hyderabad, nearly 45 are small issues of less than Rs 5 crore each, while 25 issues are even smaller of less than Rs 2.5 crore.

Even though many were heavily oversubscribed, a look at their listed and current prices portrays a different picture. Stocks, such as Telesys Software, Fore C Software, Helios & Matheson Information Technology, Contech Software, Softpro Systems, Celebra Integrated and Zenith Infotech, which were issued at a premium, are quoting below their issue price. Even certain par value issues are all quoting below par.

To compound the problem, the lack of liquidity in these stocks has ensured that investors cannot exit from the stock when they want to do so.

With more than 500 companies, most of whom are former NBFCs’ which have changed their names to suggest IT activity, the danger of reaching "scam" proportions is not far away.
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