Emkay Global has asked the Securities Appellate Tribunal (SAT) to direct the National Stock Exchange (NSE) to disclose the show-cause notice that the capital market regulator has issued to the bourse in the flash crash matter.
The tribunal, while hearing the appeal filed by the domestic brokerage, gave the exchange two weeks to file its reply while posting the matter for August 29. Emkay moved SAT after NSE refused to cancel an erroneous trade that triggered a 900-point fall in the Nifty in October last year.
Appearing on behalf of Emkay, Maharashtra advocate general Darius Khambata argued that NSE refused to cancel the trades citing gross negligence on the part of the brokerage though recent reports suggest that the bourse has also been issued a show-cause notice (SCN) for negligence. ?We want NSE to disclose the show-cause notice,? he said.
The Securities and Exchange Board of India (Sebi) issued a SCN to NSE in April for lack of risk-management systems that led to the flash crash in October last year. NSE, however, has already responded to Sebi?s notice reiterating its stance that all the then prevailing regulatory requirements were complied with.
On October 5, 2012, around 9.50 am, Nifty suddenly fell 900 points or 15.5%. Following the freak trade and the subsequent fall, the market-wide circuit limits got triggered and trading was suspended for 15 minutes.
According to Emkay, a dealer made a bona-fide error while executing an order to transact a Nifty cash basket. While the brokerage requested NSE for annulment of the trade, the bourse declined, citing lack of controls and negligence at the broker?s terminal.