Mumbai, June 18: The Bombay Stock Exchange has asked members to beef up their risk management operations in expectations of an increase in the volumes with the BOLT expansion. This is because the exchange is anticipating an increase in the risk factor involved in the form of fake/forge/stolen shares. The exchange has recommended a procedure to help members prevent introduction of fake shares by clients and also help them in their dealings with clients.

It has suggested that the members obtain xerox copies of few shares and transfer deeds to be delivered to the clearing house which are obtained from the sub-brokers/clients. The brokers should confirm the genuineness of the shares or identify the signature difference or any other reason for which these shares could be a bad delivery. In the case of companies where fake shares are reported to be more in circulation, the quantum of verification has been suggested to be at least twice the normal checking.

For a single delivery of one scrip which amounts to more than Rs 2.5 lakh from a client/sub-broker a xerox copy of at least one share certificate and transfer deed should be sent to the company. In case of deliveries of more than Rs 2.5 lakh, random share certificates should be selected for the verification process. Where the deliveries have been received from the clearing house, shares worth Rs 5 lakh and above in a single scrip can be verified through a registrar. The exchange has also streamlined its operations relating to the settlement of bad deliveries following a decision taken by the market operations committee. The settlement objections should be accompanied with a chukada/award from at least 2 members of the arbitration committee along with the bad delivery objection memos.

Members have been given a maximum period of 3 months from the last date of settlement in which delivery from the delivering member has been received, to lodge in the bad delivery cell. The receiving member should be raising the bad delivery against the immediate delivering member who in turn will take it up with the introducing member. The exchange has taken this step after they decided to route all the settlement and company bad deliveries through the bad delivery cell.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.