Inventure Growth & Securities has moved the Securities Appellate Tribunal (SAT), challenging a penalty imposed by the National Stock Exchange (NSE) in the matter of the flash crash that saw the benchmark Nifty shedding 900 points and trading being suspended for 15 minutes in October last year. The tribunal admitted the plea filed by the Mumbai-based brokerage and has listed the matter for hearing next month. Inventure is the second brokerage after Emkay Global to challenge the penalty imposed by NSE in the ?flash crash? matter.
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The matter dates back to October 5 last year, when a dealer at Emkay Global punched an order on behalf of a fund house to sell a basket of shares that were part of the benchmark Nifty index. According to the findings of a panel set up by NSE, the dealer punched in a sale order of 17 lakh Nifty shares, instead of a sale order worth R17 lakh on Nifty.
Based on its findings, NSE refused to annul the trades as requested by Emkay, citing alleged failure of risk management procedures that could have possibly blocked the trades from being executed. Inventure and PK Shah Shares & Securities were the two counterparties to the erroneous trade, according to the NSE report.
NSE imposed a total penalty of R50 lakh on Inventure with 50% of the amount being in ‘suspended’ form. This implies that the brokerage will be monitored for six months and if risk management systems are put in place, then half the penalty amount will be waived off. Early this month, Emkay Global filed an appeal in SAT against the NSE order rejecting its plea for cancelling the erroneous trades. According to NSE, 59 erroneous orders worth R650 crore were placed by Emkay, which triggered the halt.