Sinha wants badla
to go
New Delhi: Finance
Minister Yashwant Sinha has indicated that the government is in favour of banning badla
when rolling settlement is introduced from July 2, although officially the decision has
been left to the Sebi board.
All measures announced by Sebi are likely to go through, including ban on short sales,
despite market sentiment against it.
The belief
in the ministry is that badla is the root cause of all manipulation in the market.
There is some opposition
to the introduction of rolling settlement within Sebi as well, on technical grounds.
Rolling settlement perceives a T+5 scenario where transactions have be squared up within 5
days after trade through payment through the banking system. The final aim is to achieve a
T+3 settlement. The practice has not been popular with the 160 'B' group shares where it
has already been introduced. Now the finance ministry wants it extended to the 200 'A'
group shares as well.
They also fear of a market
crash in the face of a liquidity crunch if bankers are not able to clear payments within
the prescribed time period.
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Bourses hit
by low market turnover
Mumbai: The fall in turnover in the stock markets, thanks to recent developments, has
brought down the earnings of stock exchanges. The main source of earnings for stock
exchanges is the transaction charges they levy on market operators. Hence a declining
turnover in the capital market will directly affect this income.
Thus, the BSE has
earned income from transaction charges, amounting to Rs 1.17 crore in April, much lower
than the Rs 5.46 crore recorded in March. As against this, it had earned total transaction
charges of Rs 3.02 crore in April 2000.
Transaction charges are
recovered from broker members on the basis of business volumes. The BSE charges Rs 2.50
and the NSE charges Rs 6 for business volumes of Rs 1 lakh per member.
Turnovers have slumped at
both the exchanges from a daily average of Rs 11,300 crore in February to Rs 4,800 crore
in March and Rs 3,000 crore in April 2001.
The fall in turnover has been attributed to Sebi's crackdown on leading brokers and the
ban on short sales, which brought down speculative business to a standstill. There are
fears that it may further go down when rolling settlement gets introduced from July 2.
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Brightstar
still firmly in race for VST
Kolkata/Hyderabad/New Delhi: The Damani controlled Brightstar Investments, which has
made an open offer for VST, and whose offer proposal is still awaiting clearance from
Sebi, made it clear that it is still firmly in the race, and that Sebi had almost cleared
the proposal.
It informed the
Hyderabad stock exchange of its open market purchases, which had taken its acquisitions to
0.52 per cent of the equity capital of VST from the open market, bringing up its holding
in VST to 14.97 per cent.
"Brightstar is
certainly buying VST shares and it wants to underline the fact that the open offer is
going ahead and that it is committed to it," said John Band, CEO of ASK Raymond
James, lead managers to the company offer. He said Sebi officials had cleared the open
offer application and it was only awaiting the signature of DR Mehta, who was out of town.
Brightstar had proposed to
acquire 30.88 lakh shares of VST at a price of Rs 112 per share but had been held up
because of investigations being made into the role of the Damani brothers in the recent
stock market crisis.
Russell Credit Ltd, an
investment subsidiary of ITC, had come up with a counter offer at the rate of Rs 115 per
share. Russell Credit has also been buying up the stock in the open market.
Meanwhile, there are
reports that Brightstar Investments is likely to hike the offer price
"marginally" from its open offer price of Rs 112.
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Nedungadi
doors closed for Banthia
Kozhikode: The Reserve Bank of India (RBI) has debarred Mr Rajendra Kumar Banthia,
former vice-president of the Bombay Stock Exchange (BSE), as director of Nedungadi Bank
Ltd (NBL).
The directive comes in the wake of its findings that the Mumbai-based brokerage outfits
Custodian Funds India Ltd, Harvest Deal Securities and Srikant G Mantri
which had been misusing NBL funds for indulging in arbitrage business are controlled by Mr
Banthia. Mr Banthia is said to own 8 per of the shares of the bank, and access 39 to 40
percent through proxies.
This is seen as a major step by the RBI to clean up the banking system by sending out
clear signals to sharebrokers that it will not be possible to hijack banks to misuse their
funds.
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