Kerb Deals To The Fore Again

Kerb trading is dead. Long live kerb trading.

Even after the Securities and Exchange Board of India (Sebi) put a complete ban of the kerb trading that takes place outside the purview of exchanges after official trading hours, the practice is gaining fresh momentum across the country, mainly in Kanpur, Kolkata, Mathura, Ahmedabad, Rajkot and Mumbai.

The new avatar of kerb is different on at least two counts from its earlier form. It is now a two-hour affair, beginning 8 p m, and rates are based on closing price of stocks on Kanpur Stock Exchange.

Previously, kerb trades began immediately after closing of official trading and took place earlier in the evening. Prices were normally linked with closing rates of stocks on the local bourse. So, the new kerb is a national phenomenon in the sense that all prices are benchmarked against a single exchange, i.e., the Kanpur bourse.

The modus operandi of kerb trades, is, however, unchanged from its previous form. A buyer and a seller agree on a certain price of a stock between 8 p m and 10 p m. This unofficial agreement is converted into an official deal by putting the trade price and quantity simultaneously by the seller and buyer into the official system. Trades are mostly recorded on the National Stock Exchange, with a few being punched on Bombay Stock Exchange.

The conversion of outside-the-market deals into the official system is evident from price quotations. Some select counters frequently begin day