Shivraj Puri, a Citibank manager who allegedly swindled the bank’s rich clients of around Rs 300 crore, is understood to have generated volumes of around Rs 10,000 crore in the domestic stock market in the last one year.
Both the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) were trying to find if Puri was also involved in front-running and used his information on positions taken by Citi for placing bets, said an official with one of the regulators.
Puri generated huge volumes in the derivatives segment of the National Stock Exchange (NSE). However, on the Bombay Stock Exchange (BSE), he did trades worth only Rs 50 lakh, and only in the cash segment. One reason for this could be that BSE’s derivatives segment is not very active. Both BSE and NSE had given data to the Gurgaon police and Sebi, said top exchange officials.
Puri, who handled high networth individual accounts, is alleged to have diverted around Rs 300 crore belonging to more than 20 clients. He conducted most of his trades through Religare Enterprise and Bonanza Portfolio in New Delhi. Apart from his own, Puri had opened trading accounts in the name of his father and wife.
When contacted, the Bonanza director did not take the call. Without giving specific transaction details, Religare said it had given all details to the investigators.
But the question is, how did Puri generate such huge volumes? Exchange officials said a majority of trades were in Nifty options. To play in Nifty options, one has to pay just a premium on the strike price. This is as low as 1-1.5 per cent of the price of the asset. So, if Puri is said to have diverted Rs 300 crore to equity derivatives, his positions were huge, said traders.
Stock brokers say speculators mainly choose to trade Nifty options so that they do not have to take delivery and because the position can be squared off the same day.
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On an average, around Rs 1 lakh crore worth of equity derivatives are traded daily on NSE, of which stock and Nifty options generate 40-50 per cent of volumes. On an average, a large stock broking firm generates a derivatives volume of Rs 5,000 crore in a day.
Such high liquidity makes it easy for speculators like Puri to generate huge volumes, especially in the absence of physical settlement in derivatives.