The Sebi-enforced ban on badla and the introduction of compulsory rolling settlement has jeopardised financial markets across the country, according to brokers at the Ahmedabad Stock Exchange (ASE).
"The value of the ASE card has dropped 77 per cent to Rs 8 lakh, as against Rs 23 lakh quoted in January this year," Anil Shah, secretary of ASE Brokers Association said.
Even in Mumbai, cards are now available for as low as Rs 50-60 lakh, as against a couple of crores quoted 6 to 7 months ago.
A leading broker at the ASE said up to 26 cards had become totally in-operative due to lack of work. The daily turnover at the ASE has dropped drastically to Rs 8 to Rs 10 crore a day, as against Rs 300 crore between January and March this year.
Market capitalisation, which was 28.8 per cent before the Sebi ban came into effect, has now dropped to 6 per cent.
Rolling settlement without deferral products cannot be successful and without a strong cash market, there cannot be a strong derivative market.
Leverage and liquidity hold key to the survival of any market. However, the new system of rolling settlement has taken away all leverage facilities that traders used to enjoy earlier, another broker said.
He said in the prevailing market, the government's ambitious plan for disinvestment of PSUs cannot be successful and ultimately the fiscal deficit will rise.
The present liquid situation will not only kill small and medium brokers but strengthen foreign brokers.
Suggesting a simple solution to the present market crisis, two major brokers proposed that deferral products or a modified carry forward system be brought into the rolling mode.
