Mumbai, Oct 26: The decision of the Bombay Stock Exchange (BSE) to strictly monitor the gross exposure limits of its brokers led to a check of a huge build-up of positions on Monday. This, according to brokers, was one of the reasons for the Sensex moving in a narrow region after recording hefty early morning gains, with several players forced to sit on the sides after coming close to breaching their exposure limits. The exchange started on-line monitoring of the Sebi prescribed gross exposure limits from Monday onwards. Sebi has prescribed a gross exposure limit on each broker at 20 times his base minimum capital.Interestingly, the exchange's volume was restricted to Rs 1,355 crore contributed by over 2,231 active users reported on the bourse. Similarly, the BSE-30 share Sensitive index which shot up by 125 points at 2,912 points within 25 minutes of the trading session continued to move in a stagnant manner until the last phase where sales were pressed in order to create a balanced position within theprescribed limits. ``If not for the 20 times limit, the volumes on the exchange would have surely been in the range of Rs 1,600-2,000 crore given the upbeat mood of the market participants given the seven point package announced by the prime minister,'' said a BSE broker, citing the example of those days when the exchange registered a phenomenal turnover of over Rs 1,600 crore in a lacklustre market. On the other hand, a flaw in the trading software also led to a few brokers' gross exposure limit being calculated erroneously and their terminals being disabled.
Senior BSE officials were not available for comment. Exchange executive director, RC Mathur is out of the country. Sources, however, said that the exchange has decided to monitor exposure limits which have been set at 20 times of the base minimum capital, rigidly, in the wake of the infamous payments crisis at the bourse in June this year.
Sebi's directive on the gross exposure limit issued early this year had said: "The upper limit for the grossexposure (aggregate of scrip wise cumulative net outstanding purchases plus cumulative net outstanding sales) of a member should be placed at 20 times of the broker's base minimum capital plus the additional capital deposited with the exchange". It should be recalled that BSE had decided to monitor the gross exposure positions of the members. However, the gross exposure monitoring was conducted on manual basis after the closing of the trading session, due to the absence of an online surveillance mechanism.
According to sources, the exchange has redesigned its trading software to monitor the positions of the brokers which was implemented from October 26.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
Printer-friendly page
