The National Stock Exchange (NSE) has identified over 600 illiquid scrips listed at the exchange which have been plagued with poor trading volumes in the past and are also prone to price manipulation.
The exchange has decided to closely monitor the trading volumes in these scrips to ensure that trading members do not indulge in malpractices.
Punitive action, including fines, will be initiated by the exchange against those members who deal in these scrips. The action will initiated as and when the exchange detects excessive trading volumes at these counters.
The exchange top brass has indicated that in the long run such illiquid scrips may face delisting from the exchange if they continue to attract substantially low volumes. We have decided to weed out most of the scrips which are illiquid in nature, Patil said.
If unusually large trading volume is witnessed at these counters, then the exchange officials have decided to call for the details of the deals, including the contract notes issued, from the brokers. If required the exchange officials will also visit the office of the broker concerned to seek more clarity.
These illiquid scrips have been identified on the basis of their past trading volumes, number of trades and other such details. This was confirmed by the managing director of the NSE R H Patil. The idea behind such a move is also to identify the brokers who are involved in malpractices in trading. Patil is of the view that the investors will not be affected by the delisting of such scrips as they are already listed at any one of the regional bourses.
Since the revenue generated out of the listing fee forms merely 3 per cent of its total income, the exchange is not unduly worried about loss of revenue from the delisting scrips. The exchange has asked Wipro to develop a new system which will help in detection of excessive volumes at these illiquid counters.
At present, the exchange has to keep a watch at all such counters in order to detect unusually large volumes at illiquid counters. This software will be implemented in modules in the days to come, Patil said.
NSE no to new association
The NSE has decided not to recognise the new body created through the merger of the various NSE associations nation-wide. Recently the Mumbai-based Association of NSE Members of India (ANMI) and the Delhi-based NSE Members Association decided to merge.
The exchange is not a place for trade union activities. It should also be borne in mind that the trading members are not employees of the exchange, managing director R H Patil said.
