The Bombay Stock Exchange (BSE), in a series of measures to make the markets safer, will introduce a complete on-line monitoring system at the exchange. This will be introduced on a trial basis by July and in full scale by August, top BSE officials said.
The exchange will also introduce parameters in its surveillance platform wherein checks can be ensured at the earliest. The current manual system of checking records does not provide for this. The exchange will also strengthen the `know-your-client' concept which will eliminate a key problem faced by BSE brokers in recent weeks.
Former BSE president M G Damani (with J C Parekh engaged at a Sebi meeting) said yesterday that the exchange is set to confidently complete settlement no 13 with the pay-in on Friday.
"We are sure that we will come out of this payment problem unscathed,'' he said.
"There was a price rigging attempt in certain scrips by sources close to Harshad Mehta. But this was not restricted to one exchange.... it was across the markets,'' Mathur, the BSE executive director, said.
Refusing to divulge how the crisis was resolved, Damani said: "We had sought all the broker-client details when we noticed the irregularities. We do not have the power to lift the corporate veil. Orders had been placed by clients whose method of operation we cannot trace directly... it is for the government agencies to carry out investigations.''
Mathur assessed that a section of the brokers had acted in a "reckless" manner while trading.
"By this I do not only mean moving beyond their capital adequacy norms or carryforward limits. They systematically built-up concentrated positions viz-a-viz their clients who later threw up their hands when the markets came crashing,'' he said.
R C Mathur said the exchange would initiate a detailed dialogue with its broker members to ascertain "what really went wrong".
The exchange said that the trade guarantee fund (of Rs 315 crore) remained untouched during the payment crisis.
The brokers' contingency fund was also not utilised, Damani said, adding that "from every crisis one will learn a lesson... though it is not that the fund will never be touched."
The BSE officials said that the badla rates coming down to 15-17 per cent indicate that the confidence in the markets was still there. Deliveries during recent settlements at the exchange touched 25 per cent. The BSE top brass admitted that further fortification of the surveillance department may be looked at, if required.
"The lesson from the crisis is that more soul searching is required," Mathur said.
