Nifty 900-points flash crash: Sebi initiates probe

Nifty 900-points flash crash: Sebi initiates probe

BT Online Bureau   Mumbai     Last Updated: October 5, 2012  | 15:24 IST

The Securities and Exchange Board of India (Sebi) has begun initial probe into the 'flash crash' of National Stock Exchange (NSE) index Nifty, which fell nearly 900 points on Friday morning, halting the trade on the exchange for about 15 minutes.

NSE has claimed there were no technical glitches in its system and the crash was due to 'erroneous' trade orders worth over Rs 650 crore by Emkay Global, which has been now disabled by the bourse for trading.

However, a senior regulatory official said Sebi would look into whether adequate safeguard mechanism was in place to avoid a 'flash crash' like situation, as the so-called freak trades were executed in a number of well-known blue-chip stocks, including some large banking shares.

While there are no circuit filters in large blue-chip stocks, the market systems are generally well-prepared to handle any mischief or large erroneous trades.

The regulator is also concerned that the instances of 'freak trades' seem to be on the rise, including the recent one that involved the shares of Reliance Industries.

NSE said the abnormal orders were 'non-algo' in nature and were entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book. The exchange has also identified these orders to a specific dealer terminal.

The incident occurred on a day when expectations were high for a significant upward rally on the bourses, following some major reform measures approved by the government on Thursday, including on foreign direct investment (FDI) in sectors like insurance and pension.

With inputs from PTI

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