Millennium Post

Bourses need stronger circuit breakers: Sebi

The index-based circuit breaker system, which is already in place, brings to halt trading in all equity and equity derivative markets in case of a steep swing in share movements of BSE’s Sensex or NSE’s Nifty. There is a trading halt in all equity and equity derivative markets on 10 per cent, 15 per cent and 20 per cent movement either way of Sensex or Nifty.

In a circular, Sebi has asked NSE and BSE to “compute their market-wide index (Nifty and Sensex respectively) after every trade in the index constituent stocks and shall check for breach of market-wide circuit breaker limits after every such computation of the market-wide index.” In the event of breach of market-wide circuit breaker limit, stock exchanges will stop matching of orders to bring about a trading halt. All unmatched orders present in the system will thereupon be purged by the stock exchange.

Besides, exchanges have been directed to implement suitable mechanism to ensure that all messages related to market-wide index circuit breakers are given higher priority over other messages, Securities and Exchange Board of India (Sebi) said. Further, the systems (including the network) for computation of market-wide index, checking for breach of circuit breaker limits and initiating message to stop matching of executable order and acceptance of fresh orders, would not be used for any other purposes.

With the view to identifying improvements, exchanges will include a review of index based market-wide circuit breaker mechanism in their annual system audit.

Capital market watchdog imposes Rs 11.8-cr fine on Brooks Labs, 5 execs

Capital markets regulator Sebi on Monday imposed a penalty of Rs 11.80 crore on Brooks Laboratories and its five top executives for fraudulent activities including “round tripping of funds” from the company’s IPO proceeds.

Securities and Exchange Board of India (Sebi) has imposed the fine on Brooks Laboratories, the company chairman Atul Ranchal, Managing Director Rajesh Mahajan, CEO Durga Shankar Maity, Chief Financial Officer Ketan Shah and Company Secretary Parvinder Kaur. According to Sebi, the company and its senior officials had indulged in “acts of round tripping of funds / siphoning off funds from the IPO proceeds, mis-utilisation of IPO proceeds coupled with non disclosures and wrong disclosure in the Offer Document”.

It also noted that the entities had not disclosed “material information” with respect to availing Inter Corporate Deposits (ICDs) to the tune of Rs 30.40 crores, among others, in the IPO offer document.
Accordingly, Sebi in a ruling today said “a consolidated penalty of Rs 11.80 Crores is imposed upon all noticees”. Sebi had conducted a probe into alleged irregularities in the Initial Public Offer (IPO) of Brooks Laboratories covering the period from June 2011 to September 2011.

The investigation found that the company and its top executives along with several other entities had indulged into fraudulent exercise including round tripping of funds to the tune of Rs 8 crore from the IPO proceeds.

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