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Nalini D 'Souza and Aabhas Pandya
Mumbai, June 3: Negotiated deals on the Bombay Stock Exchange are losing their special charm. Thanks to demat, negotiated deals have lost their cutting edge. The price distortion resulting indirectly from negotiated deals will also be a thing of the past.
Volumes on the negotiated segment of the Bombay Stock Exchange (BSE) has registered a sharp decline during the past few sessions to a low of Rs 8.44 crore on June 3. Figures collated by The Financial Express shows that the turnover registered on the negotiated segment has fallen from a high of Rs 22.55 crore on May 26, to a low of Rs 8.44 crore on June 3.
Similarly, the percentage of volumes generated on the negotiated segment to the total turnover registered on the exchange has nosedived from 1.65 per cent to 0.67 per cent on Thursday. It may be recalled that on May 26, the turnover on the BSE was at a high of Rs 1,359 crore and the contributions from the negotiated segment stood at Rs 22.55 crore. However, as the volumes on the exchange took a beatingon account of Kargil attacks, the turnover on the exchange also declined to a low of Rs 1,094 crore. The decline in the turnover on the negotiated segment, according to brokers, has been attributed to the lacklustre nature of business by domestic and FII brokerage house on account of the problems on the Kargil front.
``While FIIs traditionally wanted their transactions to be routed through the negotiated segment for the various benefits associated with the same, in the demat environment they no longer fancy to trade through the special window,'' explained a veteran Mumbai-based broker. Brokers explained that since all deals reported on the negotiated segment also have to be within the 8 per cent intra-day price band, coupled with the compulsion to trade only in demat stocks, institutions at large have shifted to online screen based trading.
``Now with deliveries settled through the demat mode why should we make our intent public,'' said a dealer at a leading FII brokerage firm highlighting instances whenas soon as an institutional brokerage house reported a deal on the exchanges, punters tightened their grip at the counter, making it difficult for investors to buy the stock. This also led to a distortion in price.
It may also be recalled that all transactions finalised outside the system needs to be immediately reported at the bourses in accordance with Sebi norms. ``Similarly, the other problems of finding a buyer or seller for the exact quantity to be bought or sold sometimes leads to situations where a broker needs to risk his integrity because he has to identify himself and sometimes, even the client for whom he is buying or selling,'' explained the broker.
According to brokers, with the tick-size on transactions having been reduced to 0.05 paise, which in turn has helped an increase in volumes, getting orders matched on the screen is no longer a cumbersome process.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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