Brokers Bid Badla A Fond Farewell

Stock exchanges across the country today bade farewell to badla-- the decades-old financing mechanism. And surprisingly, on a positive note. Select old as well as new economy stocks were in demand and after moving in an intra-day range of 80 points, the sensex settled with a gain of 51.92 points at 3,456.78.

Come Monday, along with rolling settlement, uniform settlement and derivatives trading, a new era will be ushered in on the Indian stock exchanges. Technically, however, the last badla session was held last Saturday on the BSE and Tuesday this week on the NSE.

"If one can say so, the new system got introduced today itself as the positions opened today had to be squared up during the trading hours itself or it would have ended into giving or taking delivery," points out Darshan Mehta, CEO, Anagram Stock Broking.

Brokers are cautious but at the same time keen to embrace the new system. "Like all good things in life, the badla system has come to an end. The adjustment to the new system will be difficult for most marketmen," said Vijay Shah, a Mumbai-based broker, summing up the mood of the market on the last day. Veteran brokers left the ring quietly as if they were returning from a funeral.

J R Varma, former Sebi executive and an ardent supporter of rolling settlement, had earlier told this paper that the transition would be painful. "There surely will be pain as the system migrates from the familiarity of badla to the complexity of derivatives trading. The Indian equities market has to move up to better products even if it means some short-term adjustment pains."

There were also voices of dissent. MR Maya, a former BSE president said, "It was stupid on the part of the market regulator to shut down an age-old system. Instead, it should have allowed both derivatives and badla simultaneously and let the market decide which is the better product."

On the bourses, already a large number of outstanding positions have been unwound. The volumes in the derivatives markets have not shown any significant rise in the last few days. At least not in proportion to the decline in the badla markets.

Adds Praveen Shah, another city-based broker: "This could be due to the fact that people are still not very comfortable with these instruments. It will take some time and experience before they are at ease with the new products."

Amid the pall of gloom, there was a flicker of fun on Dalal Street today. Some brokers even cracked jokes to liven up the situation.

Sample this: "A boy graduates and when he goes to the principal to collect his certificate, the latter says,