Hectic efforts on to bail out stock brokers

It is estimated that there would be a shortfall of nearly Rs 100 crore on both the exchanges. Brokers facingpayment problems in the BPL scrip have been bailed out as the BPL officials have agreed to buy the outstanding position in the scrip at a price of Rs 240 per share. Similarly, there is likely to be an informal settlement in the case of Videocon shares.

In the case of NSE, the pay-out was completed on Wednesday after the clearing corporation stepped in to meet a shortfall of about Rs 10 crore, while in the case of BSE, the pay-in commences on Thursday. The settlement was concluded with the value of securities being Rs 1,572 crore and funds Rs 377 crore, NSE said in a statement. There were five members who had problems in making the necessary payments. They are making arrangements to meet the shortfall.

SEBI chairman D R Mehta said the system had in no way been affected and only a handful of brokers had been adversely affected. "The whole idea of the settlement fund is to ensure that the settlement goes through and that will happen. The rumours that the BSE trade guarantee fund of Rs 350 crore will be wipedout are baseless. If subsequent investigations by the exchanges on the defaulting members reveal that they had indulged in excessive speculation leading to huge losses, then one must say that it would be good for the system, if such brokers stay out of it," he said.

It may be recalled that the payment problem — a major reason for the recent crash in Sensex — occurred as brokers of Harshad Mehta failed to meet their payment obligations in BPL, Videocon International, Zee TV and Sterlite Industries. These scrips have since fallen by nearly 50-90 per cent on the BSE. Brokers of the big bull had accumulated huge quantities of these scrips and others like Satyam Computer and Pentafour Software in the last few months.

Many other brokers and investors who had blindly followed the big bull are also in trouble. The followers of big bull had accumulated these stocks at high price levels. "The 240-point rise in Sensex will help in solving the payment crisis. There was huge short-covering today after SEBI imposed apartial ban on short sales. Now SEBI should see to it that the market is manipulated by some brokers like the way it happened," said a broker.