Explain Libra Dues Status On Ril Auction, Nse Told

According to highly placed sources, the stockmarket watchdog had recently written to NSE seeking to know the details about the position pertaining to Libra, and whether the firm had made the payments due from it for the short deliveries. Libra Management had run up massive short deliveries to the tune of a hefty 14 lakh, totalling about Rs 4.6 crore.

Sebi sources say the payments made by the broker to the NSE so far have been much less, to the tune of around Rs 40 lakh. Sebi wants the payments made or the firm declared a defaulter. The regulator also wants to know exactly what the schedule of payment provided by Libra is.

 

It may be recalled that only four firms were found to have short sold a huge number of just under 20 lakh Reliance shares in the controversial trading cycle ended July 16. The settlement saw a whopping 34 lakh-plus RIL shares come up for auctions for short deliveries.

Sebi had also decided to look into the background of these firms and how their short-selling operation on NSE was conducted. The Sebi inquiry into the massive auction, the largest ever on NSE, is nearing completion, according to sources.

NSE authorities had earlier told Business Standard that Libra had furnished to the exchange a detailed schedule of payment, following which the bourse authorities had allowed him to trade. But when asked about Sebis queries and whether Libra had paid up its commitment in full according to the payment schedule, NSE managing director R H Patil declined to comment on the matter, saying: We do not want to say anything about it at this point.

Sources in the regulatory watchdog office said the clearing corporation at an exchange could guarantee trades and take care of the counterparty risk, but the broking firm which had failed to pay up needed to be told either to pay up or declared a defaulter.

The Sebi query to NSE comes at a time when similar questions have been also raised by the regulator to the Bombay Stock Exchange about brokers failing to fulfil commitments. About 14 brokers were summoned before BSEs Disciplinary Action Committee (DAC) for similar reasons, and told to make payments within the stipulated deadlines, failing which they would be declared defaulters.

If we have taken this kind of step, why should NSE not do the same? a DAC member told Business Standard. Besides, the BSE brokers point out that the exchange had deactivated the problem brokers terminals, while Libra was trading on the NSE.

The massive auction on NSE is a controversy which refuses to go away, with the Sebi inquiry likely to come up with some interesting answers.

There were about six firms which were being probed by Sebi following the auctions.