Position Monitoring :
(i) Statement of Top 100 Purchasers/Sellers
(ii) Concentrated Purchases/Sales
(iii) Purchases/Sales of Scrips having Thin Trading
(iv) Trading in B1, B2 and Z group Scrips
(v) Pay-in liabilities above a Threshold Limit
(vi) Verification of Institutional Trades
(vii) Snap Investigation
(viii) Market Intelligence
The Surveillance Department closely monitors outstanding exposure of members on a daily basis. For this purpose, it has developed various off-line and on-line market monitoring reports. The reports are scrutinised to ascertain whether there is excessive purchase or sale position build up as compared to the normal business of the member, whether there are concentrated purchases or sales,whether the purchases have been made by inactive or financially weak members and even the quality of scrips is considered to assess the quality of exposure. Based on analysis of the above factors and the margins already paid and the capital deposited by the member, ad- hoc margins/early pay-in calls are made, if required. Some members are even advised to reduce their outstanding exposure in the market. Trading restrictions are placed on their business as and when deemed fit.
The department thus executes the Risk Management functions to avert possible payment default of members by taking timely corrective measures.
The following key areas are examined to assess the market risk involved.
(i) Statement of Top 100 Purchasers/Sellers
Statements of top 100 net purchasers and top 100 net sellers in case of A, B1, B2 and Z group of scrips are scrutinized, on a daily basis. This enables the Department to keep a watch on the exposure of the members, ascertain the quality of exposures, measure the risk vis-a-vis cover available by way of margins, capital etc. and initiate action such as imposition of ad-hoc margins, trading restriction etc. on the members.
A detailed report on the net outstanding positions of top purchasers and top sellers with exposures in individual scrips above certain limit, margin cover available etc., is prepared on a daily basis.
(ii) Concentrated Purchases/Sales
The concentration in purchases/sales of a member in a few scrips could be considered risky. In case, such a situation is noticed, fundamentals of the scrips, their daily turnover, their nature of transactions is ascertained. Thereafter, based on the market risk perception appropriate surveillance actions are taken.
(iii) Purchases/Sales of Scrips having Thin Trading
Purchases/sales by members in scrips having thin trading is closely scrutinised as comparatively high market risk is involved in trading in such scrips. Details of trades in such scrips are called from the members to assess the market risk involved and decide on the appropriate surveillance action.
(iv) Trading in B1, B2 and Z Group Scrips
The Exchange has classified the scrips listed on the Exchange into ‘A’, ‘B1’, ‘B2’ and ‘Z’ groups. In view of the price manipulation witnessed in a few B1, B2 and Z group scrips and also as a risk management measure, the Exchange has prescribed Exposure limits in B1, B2 and Z group scrips in a single Rolling Settlement.
(v) Pay-in liabilities of members above a threshold limit
The pay-in liability of members above a certain threshold limit is monitored with respect to the pay-in amount of the members, the members capital, the margin cover available to the Exchange against the members pay-in liability, etc. In case of inadequate margin cover, the reasons of the pay-in are ascertained. If warranted, advance pay-in is called to ensure that pay-in is completed smoothly.
(vi) Verification of Institutional Trade
The institutional trades executed by the member-brokers are verified to ascertain the genuineness of trades.
(vii) Snap Investigation
The Department also carries out, wherever considered necessary, preliminary investigation of certain dealings to verify irregularities. Further actions, viz., referring the case for detailed investigations, referring the cases to the Disciplinary Action Committee (DAC) of the Exchange for taking disciplinary action against members, referring cases to the Scrutiny Committee of the Exchange to re-assess the financial soundness of the members etc., are taken depending on the findings of preliminary investigation.
(viii) Market Intelligence
The rumours floating in the market are verified with the data available with the Exchange. Newspapers, Television news channels are referred to ascertain the national and global factors affecting the market sentiments. This enables the Exchange to avert market problems before it causes a serious damage. On assessment of the market risk, decisions to call ad-hoc margins/early pay-in, advising the member to limit his business, summoning him for explanation, placing trading restriction, deactivation of BOLT TWS, etc. are taken.