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Sebi asks SEs to introduce 2-way order verification system

Confident of higher volumes of trade under rolling settlement system, Securities and Exchange Board of India on Monday tightened its market monitoring system by introducing "order verification system" based on both price and volume of trade, to prevent market manipulations.

"Initially people were hesitant with the new trading system. The volumes of trade would increase with time," Sebi chairman D R Mehta told reporters after a two-hour board meeting, even while ruling out reintroduction of badla system.

He said the regulator decided to introduce an order verification system both in terms of price and volume of trades after Sebi noticed that certain "wrong doings" were being committed by a section of brokers after rolling settlement was introduced on July 2, 2001.

The two-way order verification system was necessitated after some brokers intentionally attempted to "insert" trades in major bourses, Mehta admitted.

Investigation process has been initiated against four brokers, two each from BSE and NSE, for inserting wrong trades, he said.

BSE has already suspended two firms -- Angel Securities and Mahesh Kothari Shares and Stocks -- for three months and their trading terminals were deactivated, Mehta said adding NSE is expected to take stringent actions against two of its brokers due to similar violations.

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