2012 'flash crash':SAT asks NSE to settle trade annulment case

The Securities Appellate Tribunal has directed leading bourse NSE to accept the settlement proposed by Emkay Global Financial Services and two others related to an erroneous trade that caused a 'flash-crash' in 2012 and release the withheld payments within two weeks.
The ruling brings to an end the bickering over the issue between the exchange, Emkay Global and two counter parties -- Inventure Growth & Securities Ltd, Prakash K Shah Shares and Securities Ltd -- since the 'flash-crash' in Nifty in 2012.
Payments were withheld as the erroneous trade was not annulled by the exchange.
The case relates to orders entered by a dealer of Emkay on October 5, 2012, that had led to a flash-crash of over 900 points (fall of 15.5 per cent) in the NSE's benchmark index Nifty, forcing the bourse to temporarily halt trading.

In an order passed on Thursday, SAT directed "NSE to take on record the settlement proposed by the appellants and release the withheld payment to the parties in terms of the settlement."
"NSE is directed to release the withheld payment as expeditiously as possible and in any event within a period of two weeks from today," it added.

The order came on appeals, seeking annulment of the erroneous trades where in both parties were found to have violated the norms laid down by Sebi and NSE.
When contacted, an NSE spokesperson said the tribunal has "actually moved towards closing the annulment issue, through its advice to go ahead with the settlement procedure".

"The amount to be paid will be as per the settlement plan only," he said in an e-mailed statement.
Meanwhile, the tribunal also made it clear that disciplinary proceedings would not be impacted by its ruling.
"Both the appeals relating to annulment of trades are disposed of accordingly. This order will not come in the way of the Disciplinary Action Committee (of NSE) in continuing the proceeding pending before it against the parties to the trades in question herein," the order said.
In April 2013, the NSE had rejected the settlement proposal and following an appeal from Emkay, the Tribunal in August last year asked the exchange to pass a fresh order. In December 2014, NSE through a fresh order, again declined to take on record the proposed settlement.

"It may be important to note that the payments will not come in the way of disciplinary proceedings that may be considered by Disciplinary Action Committee separately. The annulment proceedings accordingly have come to an end," the spokesperson said.