Business Standard: After you took over in November 1995, cases of price-rigging have fallen substantially. What steps were taken to bring about this?
Mathur: When I joined the BSE, I came with an open mind with no pre-conceived notions and then in my own way set about a reform process. The surveillance system on the bourse has been entirely revamped during the first quarter of this year. The system is being constantly upgraded and we have implemented a detailed procedure of identifying the scrips in which price and volume movements are abnormal. These scrips are put on spot transactions whenever warranted. Moreover, abnormal price spurts are checked through circuit filters and circuit breakers. The BSE has intervened in 1,234 cases of price-rigging on the bourse since January.
Of this, in 37 cases, investigation has been initiated. Further, disciplinary action has been taken against seven members of the exchange because of their involvement in the price-rigging. The action included three months suspension of the trading rights of the members as also imposition of monetary penalties. Auction proceeds have been impounded by the exchange in 17 cases where the officials have unearthed clear evidence of price-rigging.
BS: What are BSE's plans for investor grievance redressal?
Mathur: This area of the exchange's function has been given top priority for it is the investors who bring in business for the broking community. The BSE has recently revamped its arbitration system and the effect has been felt immediately. With this recast, in the last three months a total of 1,823 arbitration cases between members have been disposed off. Several BSE members aided the exchange administration to solve the problems. Arbitration between members and non-members now stand at about 300 outstanding cases as against around 350 four months ago.
BS: What are the different areas of operation where the BSE has focused in the last nine months?
Mathur: The entire area of market operations has been revamped. For example, all of BSE's 5000 scrips now have a seven-day trading cycle and are routed through the clearing house. This has reduced the counter-party risk as the integrity of the transactions is the responsibility of the clearing house.
The BSE has also ensured quick collection of margin cheques within 24 hours of execution of the trade. BSE has implemented a 4-tier margin system which includes margins on gross exposure, net exposure, mark-to-market and also on concentrated holding.
On-line trading system is currently being revamped with the introduction of Unix open platform. This will enable a faster settlement process and all related data will be directly downloaded into the broker's terminal.
The bourse's auction system has been totally overhauled in this period and has been put on-line. The BSE has also developed an on-line system for the bad deliveries by which all bad deliveries have been routed through the clearing house and the buyers will get their shares duly rectified within three weeks.
