security law
This query is : Resolved
21 December 2010
Basket Trading System
The Exchange has commenced trading in the Derivatives Segment with effect from June 9, 2000 to enable the investors to, inter-alia, hedge their risks. Initially, the facility of trading in the Derivatives Segment was confined to Index Futures. Subsequently, the Exchange has introduced the Index Options and Options & Futures in select individual stocks. The investors in cash market had felt a need to limit their risk exposure in the market to movement in Sensex.
With a view to provide investors the facility of creating Sensex linked portfolios and also to create a linkage of market prices of the underlying securities of Sensex in the Cash Segment and Futures on Sensex, the Exchange has provided the facility of Basket Trading System on BOLT. In Basket Trading System, the investors are able to buy/ sell all 30 scrips of Sensex in one go in the proportion of their respective weights in the Sensex. The investors need not calculate the quantity of Sensex scrips to be bought or sold for creating Sensex linked portfolios and this function is performed by the system. The investors are also allowed to create their own baskets by deleting certain scrips from the basket of 30 scrips in the Sensex. Further, the investors can alter the weights of securities in the basket and enter their own weights. The investors can also select less than 100% weightage to reduce the value of the basket as per their own requirements.
To participate in this system, the members indicate number of Sensex basket(s) to be bought or sold, where the value of one Sensex basket is arrived at by the system by multiplying Rs.50 to prevailing Sensex. For e.g., if the Sensex is 4000, then value of one basket of Sensex would be 4000 x 50= i.e., Rs. 2,00,000/-
Further, the Basket Trading System provides the arbitrageurs an opportunity to take advantage of price differences in the underlying securities of Sensex and Futures on the Sensex by simultaneous buying and selling of baskets covering the Sensex scrips and Sensex Futures. This is expected to have balancing impact on the prices in both cash and futures markets.
The Basket Trading System, thus, meets the need of investors and also improves the depth in cash and futures markets.
The facility of Basket Trading has been introduced by the Exchange w.e.f., August 14, 2000. The trades executed under the Basket Trading System are subject to intra-day trading and gross exposure limits and daily margins as are applicable to normal trades.
Similarly, on receipt of the rectified /replaced securities from the introducing member, if the receiving member finds that securities are not proper, he has to obtain an award for invalid rectification from the BDC officials within the stipulated period and return back the documents to the introducing member.
All the unrectified bad delivery claims as well as invalid rectifications of bad deliveries go for auction /close out as the case may be as per the Rules of the Exchange and the receiving members receive either the securities in auction or an amount representing close out of bad delivery. The receipt and the delivery of the securities relating to bad deliveries is handled through the Clearing House.
The shares which have been returned under objection by a company for the second time, can be reported in the BDC as Second Time Objection. The seller in this case is not given a chance to rectify the objections and the claim is closed out on the 10th day of reporting of the objection to the BDC.
The BDC also settles the claims for Corporate Benefits through the Corporate Benefit (CB) Cycle which is a fortnightly cycle.
In case of objection reported with the BDC as Fake/Forged and Missing/Lost/Stolen shares, the rectification is allowed only in Demat mode.
The BDC in order to prevent circulation of bad securities in the market maintains database of missing/lost/stolen/fake/forged shares on the basis of information received from the companies pursuant to the clause 47(d) of the Listing Agreement. It also maintains the client caution database whereby it publishes the names of the clients / sub- brokers who are involved in introduction of fake/ forged/ missing /lost/stolen shares above a certain value through the members.
SEBI has gradually mandated that the trading of the securities of the companies should be settled in dematerialized form. In view of the progressive increase in dematerialisation of securities, the problem of bad delivery faced by the investors has considerably reduced.
The Exchange has commenced trading in the Derivatives Segment with effect from June 9, 2000 to enable the investors to, inter-alia, hedge their risks. Initially, the facility of trading in the Derivatives Segment was confined to Index Futures. Subsequently, the Exchange has introduced the Index Options and Options & Futures in select individual stocks. The investors in cash market had felt a need to limit their risk exposure in the market to movement in Sensex.
With a view to provide investors the facility of creating Sensex linked portfolios and also to create a linkage of market prices of the underlying securities of Sensex in the Cash Segment and Futures on Sensex, the Exchange has provided the facility of Basket Trading System on BOLT. In Basket Trading System, the investors are able to buy/ sell all 30 scrips of Sensex in one go in the proportion of their respective weights in the Sensex. The investors need not calculate the quantity of Sensex scrips to be bought or sold for creating Sensex linked portfolios and this function is performed by the system. The investors are also allowed to create their own baskets by deleting certain scrips from the basket of 30 scrips in the Sensex. Further, the investors can alter the weights of securities in the basket and enter their own weights. The investors can also select less than 100% weightage to reduce the value of the basket as per their own requirements.
To participate in this system, the members indicate number of Sensex basket(s) to be bought or sold, where the value of one Sensex basket is arrived at by the system by multiplying Rs.50 to prevailing Sensex. For e.g., if the Sensex is 4000, then value of one basket of Sensex would be 4000 x 50= i.e., Rs. 2,00,000/-
Further, the Basket Trading System provides the arbitrageurs an opportunity to take advantage of price differences in the underlying securities of Sensex and Futures on the Sensex by simultaneous buying and selling of baskets covering the Sensex scrips and Sensex Futures. This is expected to have balancing impact on the prices in both cash and futures markets.
The Basket Trading System, thus, meets the need of investors and also improves the depth in cash and futures markets.
The facility of Basket Trading has been introduced by the Exchange w.e.f., August 14, 2000. The trades executed under the Basket Trading System are subject to intra-day trading and gross exposure limits and daily margins as are applicable to normal trades.
Similarly, on receipt of the rectified /replaced securities from the introducing member, if the receiving member finds that securities are not proper, he has to obtain an award for invalid rectification from the BDC officials within the stipulated period and return back the documents to the introducing member.
All the unrectified bad delivery claims as well as invalid rectifications of bad deliveries go for auction /close out as the case may be as per the Rules of the Exchange and the receiving members receive either the securities in auction or an amount representing close out of bad delivery. The receipt and the delivery of the securities relating to bad deliveries is handled through the Clearing House.
The shares which have been returned under objection by a company for the second time, can be reported in the BDC as Second Time Objection. The seller in this case is not given a chance to rectify the objections and the claim is closed out on the 10th day of reporting of the objection to the BDC.
The BDC also settles the claims for Corporate Benefits through the Corporate Benefit (CB) Cycle which is a fortnightly cycle.
In case of objection reported with the BDC as Fake/Forged and Missing/Lost/Stolen shares, the rectification is allowed only in Demat mode.
The BDC in order to prevent circulation of bad securities in the market maintains database of missing/lost/stolen/fake/forged shares on the basis of information received from the companies pursuant to the clause 47(d) of the Listing Agreement. It also maintains the client caution database whereby it publishes the names of the clients / sub- brokers who are involved in introduction of fake/ forged/ missing /lost/stolen shares above a certain value through the members.
SEBI has gradually mandated that the trading of the securities of the companies should be settled in dematerialized form. In view of the progressive increase in dematerialisation of securities, the problem of bad delivery faced by the investors has considerably reduced.
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