The Securities and Exchange Board of India (Sebi) has started investigating the special second pay-in session conducted by National Securities Clearing Corporation's (NSCCL), the clearing corporation of National Stock Exchange (NSE), after the introduction of rolling-settlement.
Meanwhile, the clearing house of Bombay Stock Exchange (BSE), BoI Shareholding, has refused any such pay-in.
A Sebi official said: "We are seeking details of all such deals conducted by NSCCL. We have also asked for date-wise details such as the name of the member, identity number of depository participant, name of the depository, and names of the scrips."
The official said the capital markets regulator wanted to ascertain whether NSCCL was accommodating any short-sellers through the late pay-in.
Sebi suspects that through these special pay-ins, several brokers have been able to arbitrage between the NSE and BSE by short-selling on one exchange and buying on the other.
It is also suspected that through these special pay-ins, brokers create artificial volumes that could probably lay trap for gullible investors.
The delivery of shares under the special pay-ins was effected under the 7 p m pay-in after the purchased shares were credited to a member's account under the pay-out at 2 p.m.
Officials with NSCCL confirmed that there have been such occasions in recent times wherein members (brokers) have been accommodated through second pay-in.
An NSCCL official said, "We gave accommodation in all such cases where members confirmed that they have the stock and there was no difficulty in getting the delivery instruction executed."
He said such accommodation was available in genuine cases and the member had to pay some penalty for the late pay-in.
However, exchange sources said, "The second pay-in is resorted to by NSCCL to accommodate brokers from incurring losses and also to protect the exchange's trade guarantee fund."
