BSE brokers default on badla funds
Mumbai: Reliable sources at the BSE say that there appears to be a nexus between the Mumbai and Calcutta stock markets with names of many big Mumbai-based brokers emerging who are refusing to pay back the vyaj badla money lent to them by their clients.

The amount to be paid to clients is estimated to be in the region of
Rs 700-800 crore.

The reason is that the money was not used in vyaj badla, but was used in the notorious badla market of the Calcutta Stock Exchange.

In fact, a large part of these funds seems to have been used by brokers to fulfill their normal settlement obligations on the BSE and NSE.

Vyaj badla money is funds deployed by brokers to finance long positions on the exchanges.

Most of the losses emanate from the CSE itself either on account of badla or intra-exchange arbitrage.

Many brokers have lost money as they engaged in arbritraging between the BSE and CSE taking advantage of the price differentials. For example, a stock like HFCL can be bought on the BSE and then sold on the CSE at a different price.

The broker used to make the pay-in at the BSE out of the pay-out received from the CSE. Since the pay-out at the CSE has been held back in many cases, the pay-in at the BSE was made good out of vyaj badla funds. The result, brokers are now unable to pay back their clients.
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Sebi hunting manipulators not bull, bear
Mumbai: LK Singhvi senior executive director, Sebi conducting an investigation into manipulation of prices at the stock exchange said that there was only one comprehensive investigation being carried out at the stock exchanges and the basis of this investigation is price manipulation and not bear hammering, the bear cartel or the bull cartel.

SEBI is working on one comprehensive report that will cover all the entities involved. SEBI officials say it is difficult to prove links between different brokers to establish the presence of a cartel and it is much easier to establish a case of price manipulation.

It seems that the preliminary investigation report of Sebi will not contain all the findings as it does not see the preliminary report as the end of its investigation.

According to Singhvi the amount of data being collected is huge and the investigation spans several exchanges and new links are coming to light everyday it difficult to establish a case, immediately.
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No foul play in Amara Raja stock says NSE
Mumbai: The investigation report of the National Stock Exchange (NSE) on the Amara Raja Batteries stock has found no evidence of any price manipulation or rigging.

This report has been sent to the Securities and Exchange Board of India (Sebi).

The clean chit given by the NSE in the probe has raised many questions in the market circles, particularly as the stock has been very volatile since early this year.

On being contacted, a senior Sebi official said, "We have called for reports from both the exchanges, and once both come in we will take a view."

After failing to find any evidence of price rigging, NSE has decided to declare the payouts shortly for the transactions in Amara Raja Batteries stock for settlement no 10.

The sources said it is a general principle to declare pay-outs for genuine trades while for the trades which are found to be fictitious in nature, the exchange decides to withhold the pay-out, till further details are available with the exchange.

Other sources said that annulment of trade in the Amara Raja stock is not possible as a significant number of transactions were found to be genuine.

They said that the same individual at both the exchanges taking advantage of the arbitrage facility has undertaken both buying and selling.

The NSE and the Bombay Stock Exchange (BSE) had earlier decided to withhold the payout in case of Amara Raja Batteries following rumours of its alleged involvment in circular trading to ramp up the price and volumes.

Sections of the broking community allege that a broker along with others has rigged the price of Amara Raja Batteries from around Rs 70 to Rs 300 then dumped the shares to around Rs 322 at both the exchanges. The stock hit the lower circuit at the bourses for the next five consecutive days to reach a low of Rs 69.
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