Investors move court over shifting of scrips to trade-to-trade segment

Several investors and companies are moving court against the Bombay Stock Exchange's (BSE) decision to shift large number of stocks into trade-to-trade segment.

Two writ petitions have already been filed by Bellary Steel and Alloys and an investor at the Bombay High Court against BSE for arbitrarily shifting shares to the Z group or the trade-to-trade segment.

The advocate for Bellary Steel Ravi Goenka confirmed that a writ petition has been filed in the high court but refused to comment further on the matter. Sources said some investors of HFCL has also moved the high court against BSE's decision to shift the stock into trade-to-trade segment.

The BSE and National Stock Exchange had shifted nine of the K-10 stocks "" Global Trust Bank, HFCL, Aftek Infosys, Lupin, Silverline Industries, Pentamedia Graphics, SSI, Kopran and GTL "" to the trade-to-trade settlement system from September 26. BSE had shifted these shares after seeing huge volatility in the shares of these companies and as a measure to protect investor interest.

It has also shifted around 650 stocks belonging to B1 B2 into Z group, where trades are compulsorily done on trade-to-trade basis. The Z group has been formed to classify companies that have failed to comply with various clauses of listing agreement. Prices and volumes of these stocks have crashed after shifting into this segment.

The Bangalore-based Bellary Steel and Alloys have moved the Bombay HC against BSE for shifting its stocks from B2 to Z group despite complying with various regulations of the exchange.

The company stated in the writ petition that its shares were put into Z group without giving opportunity for hearing. BSE has said that it has shifting the stock as a surveillance measure. Sources said several other companies are also planning to move courts against the BSE and NSE for arbitrarily shifting their shares.

They said that investors have suffered owing to the sudden fall in prices and volumes following the transfer of shares to the new catogery.