Nse Inspections This Week To Check Terminal Misuse

The National Stock Exchange (NSE) will commence its inspection of member-brokers this week to counter risks arising out of practices like illegal trading/hiring of NSE terminals and other irregularities which the exchange witnesses during a settlement cycle, a NSE official said.

The exchange top-brass has already identified the list of brokers whose trading operations would need to be assessed immediately.

The crackdown follows the NSEs plan of strengthening its surveillance mechanism. Over previous months, the exchange had followed the process of checking/inspecting brokers books of accounts through periodic inspections which was usually carried out annually.

In an effort to completely eliminate risks, the exchange will now have surprise inspections. The exchange will carry out the inspection on its own after collating data from market intellegentsia.

We will act on all irregularities which are witnessed out of the settlement cycle....these could particularly be linked to problem issues like introduction of fake and forged shares, NSE deputy managing director Ravi Narain said. The irregularities would also cover issues like price manipulations, circular trading, the financing behind trading operations and huge auction amounts. The NSE currently has a team of three experts, including retired police personnel, to track such operations, besides the existing surveillance team.

The exchange top-brass are of the view that the previous inspections were merely a post-mortem. In the current scenario, we would be able to take the necessary action more swiftly, Narain said.

Over the previous months, it has been witnessed that the exchange has come under a lot of flak over reports that trading of a speculative/illegal nature takes place through NSE terminals (which are known to be operated by collegians). Exchange officials admitted that they had heard of similar reports but now surprise inspections would eliminate the risks arising out of these practices.