BSE changes rules to boost dud scrips

MUMBAI, February 9: For promoters of companies whose shares are quoting below the face value of Rs 10, here's an opportunity to push up the ...

MUMBAI, February 9: For promoters of companies whose shares are quoting below the face value of Rs 10, here8217;s an opportunity to push up the share prices by placing transactions on the Bombay Stock Exchange8217;s Online Trading system. Now they can now push up the prices of such dud scrips above the face value without attracting the circuit filter mechanism. This follows the BSE decision not to apply daily circuit filter limit on scrips which are quoted below par, ie, Rs 10.Using this relaxation, the price of a share which was quoted at Rs 2.50 last Friday can now be pushed up to Rs 12.50, Rs 112.50 or even for Rs 1112.50.

The only condition is that these sale orders will have to be executed in one shot. The order can be executed by squaring up this transaction without taking delivery of shares or giving delivery of shares.

Currently, out of over 6,700 shares listed on the BSE, about 60 per cent scrips 8211; over 3,000 scrips 8211; are traded below par. Of this, nearly 6,000 shares are listed in the B2 group and only750 shares are traded daily which has an average transaction of only three per scrip.

The daily volume in this group is just 0.10 to 0.20 per cent of the total volume. 8220;Being the first day of relaxation, many orders were placed by the brokers just for fun. Now promoters can take advantage of this relaxation. Any promoter can jack up his company share price to even Rs 10,000 against the normal market rate of only Rs 4.

But this had to be done at one go because in the next session the rate will cross the Rs 10 par value and the scrips will attract normal daily circuit filter,8221; informed a broker. The BSE has informed the members that the exchange may prescribe circuit filter limits even in such scrips which are quoted below par as a surveillance measure. For scrips with a market price of above Rs 10 but upto Rs 20, the daily circuit filter of 25 per cent will apply as usual. For these scrips intra-week circuit filter will be at 50.

It may recalled that as per the guidelines issued by the Securities andExchange Board of India SEBI, the exchange had prescribed a weekly circuit filter limit of 25 per cent in all scrips traded above par effect from January 20 and a daily circuit filter limit of 10 per cent in all scrips traded above Rs 20 effective from February 10, 1997.