BSE averts major payment crisis

MUMBAI, JUNE 19: Even as the BSE Sensex crashed 149 points on Friday following US government's sanctions and the payment crisis, the BSE bro...

MUMBAI, JUNE 19: Even as the BSE Sensex crashed 149 points on Friday following US government8217;s sanctions and the payment crisis, the BSE brokers have defused the crisis late evening by completing their pay-in without any default on account of financial cooperation extended by a section of the members.

According to stock exchange authorities, the pay-in was conducted in a smooth manner and the exchange did not have to declare any defaulters. quot;We have not touched the Trade Guaranty Fund or the Broker8217;s contingency fund to help our members out of the financial crisis,quot; sources add.

However, the exchange has decided to shut off the terminals of seven brokers and debar them from participating in the trading session, in order to avoid any further problems. quot;BSE is a commercial organisation, our first worry was that our commercial activities should not be hampered due to the problems faced by a section of the broking community,quot; sources add.

Highly placed officials of the BSE also hinted at the role playedby the big bull and several other brokers who voluntarily moved ahead to bail out other members from the current crisis. This puts an end to the wild speculations over the number of brokers who would be declared defaulters and the amount involved.

Earlier in the day, pivotals suffered a major setback on both BSE and NSE on foreign funds selling and local position-squaring. The fresh unloding was due the impact of sanctions imposed by the United States. The Sensex lost 149 points and NSE-50 43 points.

Brokers said the FIIs were selling because of the negative sentiment in the Asian region. A lackluster budget and US sanctions all contributed to the selling. Redemption pressures faced by foreign funds was one reason for the sustained FII selling.

The FIIs sold heavily on MTNL, Hindustan Lever, BHEL, Reliance, ITC, Telco and SBI counters. Being the last day of settlement most of the BSE members were busy in squaring up their position. Brokers add that the market is totally in a confusion over variousissue like SEBI8217;s ban on short sales. With the 50 per cent of outstanding short sale positions already squared up, bears had no business to do as the Sebi had banned short sales in a bid to contain declining tendency.