MUMBAI, JULY 4: Even as the Bombay Stock Exchange officials are burning midnight oil to sort out the payment problems of brokers, the total outstanding value of carry forward business (badla) at the exchange has crashed to Rs 500 crore from over Rs 1,300 crore and badla rates (interest rates on shares carried forward to the next settlement) dipped to 6-7 per cent on Saturday.This is for the first time recent time that the badla rates level has dipped since the modified badla system was put in place last year. Thereafter, badla business has been hovering at over the Rs 1,000 crore level. ``The fall in badla is only one chapter of the recent stock scam. Many skeletons are yet to come out the exchange cupboards,'' said a broker.According to market sources, the absence of short sales coupled with the steep fall in the positions marked for carry forward on account of huge margins led to the fall in badla business. Carry-forward badla rates on the BSE touched a low of 6.5 per cent before stabilising at 7.6per cent annualised. Badla rate had touched 45 per cent one month ago. This had attracted a host of high networth individuals to the badla financing.As per the figures released by BSE, the total outstanding carry-forward deals were pegged at Rs 500.41 crore. ``Bears are not grumbling about the ban on short sales. One bear syndicate is believed to have made a profit of Rs 300 crore in the bull-bear tussle in the last one month,'' said a market source.The favourite counters of former Big Bull Harshad Mehta which are now under Sebi's investigation witnessed a steady rise in the carry-forward purchase positions. While BPL recorded a huge carry-forward volume of 6.53 lakh shares, Videocon International recorded a phenomenal volume of 26.63 lakh shares. The BSE is yet to restore BOLT trading connection to five of its members who faced a tough time in meeting the payment obligations.Marketmen are not sure about the market trend and business from Monday onwards. SEBI has already reduced the daily priceband to eight per cent and replaced the weekly price cap with a graded margin system with effect from July 6, 1998. Simultaneously, the ban on short sales will also be lifted. Experts blamed the stock exchange governing boards for the recent mess in the market. ``Brokers defaulted both on the National Stock Exchange and the BSE. The broker default on the NSE was in fact more than the BSE. This shows that badla business was not responsible for the payment problems. Both the BSE and NSE managements should be blamed for inadequate monitoring. They didn't take enough measures to avoid the crisis,'' said a source.``BSE and NSE directors knew that the price rigging was engineered by Harshad's brokers. The rigging exercise went on for almost three months on both the NSE and BSE. SEBI should ask these exchanges why no action was taken at that time,'' said a fund manager. Even now, marketmen are in the dark how the NSE managed to tide over broker defaults of around Rs 50 crore.Both the exchanges claim that theyhave excellent monitoring and vigilance mechanism. The recent developments have clearly revealed that the NSE is not immune to price rigging and defaults. While much of the media attention has concentrated on the BSE, a lot of behind-the-scene activities were going on at the NSE. Five NSE brokers who were finding it difficult to meet the commitments were bailed out in the last minute.The question before market pundits is: will the stock exchanges learn from the past mistakes. ``It's unlikely. Scams and manipulations now seem to be part and parcel of the market operations. Now it has happened after the introduction of the so-called stringent vigilance mechanism,'' said a fund manager.
