Tulip IT deal error: BSE sets cut-off at Rs 96

The BSE on Friday set a cut-off price of Rs 96 for the sale of around 4.5 lakh shares yesterday of the newly listed Tulip IT Services by a Mumbai-based broker for 25 paise a share.

Those who bought the shares will be charged Rs 96 or Rs.171.15, depending on whether their purchase orders were placed before or after the fluke sale order by the Borivali-based firm.

In an official release, the exchange said that after "detailed examination of the facts and circumstances, and to minimise the distortionary effect of the trades and also to protect the interest of entities dealing in the shares," it had decided to restructure the sales.

"The sell order was placed at a price unrelated to the then prevailing market price and had a significant distortionary effect on the trading in the shares. Initially, the sell order was matched against outstanding buy orders at various prices. All subsequent buy orders were all matched at 25 paise," it pointed out.

The exchange has ruled on the principle of allowing only those who had outstanding purchase-orders at the time of the mistaken sale order be allowed to benefit from the fluke by buying the shares for the cut-off price. Those who placed their orders after the fluke will have to shell out the average transaction price for the scrip.

"The cut-off price of Rs 96/- has been arrived at by applying circuit filter limit of 20% on the issue price of Rs 120/- on the lower side on the lines of the existing practice and Rs 171.15 has been arrived at by taking the weighted average price of the trades," said the release.

Tulip IT Services Limited was listed on the Exchange yesterday. The public issue price was Rs120 and was traded without any circuit filters to enable price discovery. As per practice, filters are applied on the closing price from the second day of trading, which started at Rs 180 in the morning.

"In the afternoon, a sell order for a large quantity of shares was placed at a price of 25 paise. As is evident, the sell order was placed at a price unrelated to the then prevailing market price and had a significant distortionary effect on the trading in the shares. Initially, the sell order was matched against outstanding buy orders at various prices," the exchange said.

Meanwhile, SEBI is reported to have asked the exchange to take strict action against the erring brokerage in accordance with the exchange by-laws.