Fake, forged and stolen shares worth over Rs 2 crore have been detected before entering the National Stock Exchange (NSE) system by registrars posted at the clearing corporation in the past one month.

The success of the pre-verification drive launched by the exchange can be gauged from the fact that as many as 30-40 companies have decided to post their registrars at the clearing corporation.

The exchange has on its part decided take on lease an additional building solely for the purpose of housing the registrars undertaking the on-the-spot verification.

The companies which have recently joined the process and deployed their registrars include: Larsen & Toubro, GE Shipping and ITC. On the other hand, Colgate is expected to deploy its registrars at the clearing corporation shortly. Reliance and State Bank of India's registrars are already stationed at the clearing corporation.

Another 13 companies are in advanced stages of negotiations with the exchange authorities while another 20 have sounded off the exchange regarding their keenness to undertake pre-verification.

"The move has proved to be extremely successful with about Rs 2 crore worth of tainted shares being detected before being cleared in the past month itself. This means that members and clients have been saved from a loss of that amount as detecting these shares before clearing means that nobody suffers a loss,'' exchange deputy managing director Ravi Narain said.

As per the process, the National Stock Exchange investigating wing carries a detailed `ABC' analysis of securities even before they come in for delivery. "Trading pattern is one of the parameters on which this analysis is undertaken. Based on this, the exchange authorities detect shares which they suspect of being tainted. These shares are then handed over to the registrars stationed at the clearing corporation and they are able to ascertain whether or not the shares are tainted," said Narain.

"The shares that are found to be tainted are immediately stopped from entering into the system," he said. "The detection rate is increasing by the day and we have received tremendous cooperation from companies as more and more are willing to now come to the clearing corporation and undertake an on the spot inspection with exchange authorities," said Narain.

In a related move, the exchange has cracked down on two brokers of the bourse who have been accused of trading through the terminals of other members. "Members have now been asked to take permission from the exchange before conducting business through another member of the bourse. We have already detected two cases where this practise was rampant and we hope to haul up more brokers found to be indulging in the practice," said Narain.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.