Letters exchanged between SEBI and the BSE reveal that the market regulator was first given details of the opening of the terminals after trading hours only through a letter written on September 2. After the terminals were opened to put in trades at the Sterlite Industries counter on June 12, there was a board meeting, which followed on June 14, to discuss the payments crisis. At this meeting, SEBI senior executive director LK Singhvi, also a member of the BSE board, expressed his displeasure on the way the crisis was handled. He was not aware of the June 12 incident of opening of the trading terminals.

Subsequently,on August 7, Singhvi wrote to the BSE executive director RC Mathur informing him that during the course of investigations it was found that there were some bulk deals reported in the case of the BPL scrip, which had been entered into the trading system after 2100 hours.

In this letter to Mathur, Singhvi only mentioned the dates June 17 and 19, when transactions in BPL were entered. As data on Sterlite had not been received by Sebi at that point of time, they were not aware of the June 12 tampering of the system. Singhvi wrote saying that as far as he was aware the trading systems cannot be opened after the trading hours and sought an explanation from Mathur. In reply to this letter on August 14, there was no specific mention of the fact that trading terminals had been opened after trading hours on the three days. The letter talked of how bulk deals were taken on record and that the administration had been verbally informed.

This prompted Singhvi to write another letter to Mathur on August 24 (through hisdivision chief since Mathur had not personally responded to Singhvi's earlier letter), asking once again whether there had been any instance of putting through deals after close of business hours and what constituted "verbally informed". In a letter dated September 2, a senior BSE official wrote saying that apart from Sterlite Industries on June 12 and BPL on June 17 and 19, there were no instances of trades being reported after closure of normal trading hours.

This, according to SEBI sources, was the first time that the exchange specifically mentioned about having opened the trading terminals after trading hours.

Even though the June 17 and 19 opening of the trading system had come to SEBI's notice through investigations in the BPL scrip movement, the opening of the trading systems on June 12 to enter trades in Sterlite Industries scrip came to SEBI's notice only through this letter.

The letter cited the legal provisions in the bye-laws, which allowed the exchange's president or governing board toalter the time of a trading session.

"In the instant case the oral direction from the office bearers/governing board members were received to allow these transactions to be put through and oral concurrence was obtained from the executive director. Subsequently, the transactions were punched by the members themselves from the contingency pool of BOLT terminals. Later on notes were put up to the executive director and approvals were obtained," the September 2 letter states.

In fact, in another letter to SEBI, Mathur had conceded that when the exchange had for the second time identified heavy positions on behalf of common clients in April and May (earlier in February), it should have taken more vigorous investigations and informed SEBI of the same.