SEBI allows institutional clients to have direct market access

Brokers’ manual intervention is not needed

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What it means

This move offered clients direct control over orders, faster execution, reduced risk of errors associated with manual orders and better audit trails.

The move will also reduce the cost of transaction besides curbing possible ‘front- running’ by employees of broking outfits

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Our Bureau

Mumbai, April 3 Institutional investors now can have direct market access (DMA) without brokers’ manual intervention if suitable infrastructure is created by brokers, a SEBI circular addressed to the BSE and the NSE said here on Thursday.

SEBI said DMA offered clients direct control over orders, faster execution, reduced risk of errors associated with manual orders and better audit trails.

Commenting on the nature of the new arrangement, Mr Raamdeo Agrawal, Director of Motilal Oswal Financial Services, said, “What the SEBI directive has implied is that institutional investors (such as FIIs, mutual funds, insurance companies, banks and hedge funds) too, could have a trading terminal similar to that of sub-brokers, in their offices.”

The physical location of the trading terminal is potentially an evidence of the place from where the order is emanating. That could lead to tax complications as it could be construed as evidence of ‘place of business’ – an important attribute for determining tax liability, said an expert with long years of experience in taxation and regulatory matters.

Mr Anil Saxena, CFO of Religare Enterprises, said that the move will reduce the cost of transaction besides curbing possible ‘front- running’ by employees of broking outfits. The improved confidentiality of trades might attract foreign hedge funds that were not willing to do business here earlier, he added.

Mr Sandeep Singal, Co-Head, Institutional Derivatives Business of Emkay Shares and Stock Brokers Ltd, said, “This allows execution of various products based on quantitative and algorithmic models that were not possible so far.

“It would lead to further consolidation in the institutional segment of broking business. Institutional players might prefer to pass their substantial business through their captive broking outfits.”

The broker shall enter into a specific agreement with the clients for whom they permit DMA facility. The client shall use the facility only to execute his own trades and not on behalf of any other person, SEBI said.

SEBI has also directed the brokers to carry out appropriate validation of all risk parameters including quantity limits, price range checks, order value, and credit checks before the orders are released to the Exchange.

Bulk deal: Premier tops the chart at BSE

On the BSE, Citigroup Global Market sold 796,694 shares at Rs 90.01 a share and Laxmi Jain bought 383,191 shares at Rs 90 a share and Sushma Jain bought 400,000 shares at Rs 90 a share of Premier.

Newgen International sold 200,000 shares at Rs 6.05 a share of Cat Technologies.

Committed Trading bought 200,000 shares at Rs 6.02 a share of Media Matrix Worldwide.

Macquarie Bank sold 539,193 shares at Rs 174.29 a share and Solrex Pharmaceuticals Company bought 1,062,040 shares at Rs 172.94 a share of Orchid Chemicals & Pharmaceuticals.

Bhavook Tripathi bought 165,277 shares at Rs 78.07 a share and Ralph Henry Kenney sold 165,050 shares at Rs 78 a share of R Systems International.

BSE, NSE fix new circuit filter limits

A movement of 1,575 points in the Sensex and 470 points in the Nifty would bring trading to a halt through the current quarter ending June, as per the new circuit filter limits set by the country's two premier bourses BSE and NSE. This circuit w ould be applicable on movements on either side of gain or loss, circulars on both the bourses said.

While a movement of 1,575 points in Sensex or 470 points in Nifty, representing 10 per cent of the closing value of the respective indices in the previous quarter, would bring about a halt for one hour, the halt periods would be greater in case of bigger falls after the trading resumes. The exchanges fix the circuit limits at the beginning of every quarter.

According to the circuit-breaker system, a 10 per cent movement before 1300 hrs triggers a one-hour halt, a gain or loss of 15 per cent before 1300 hours halts the trading for two hours, while a movement of 20 per cent leads to the trading being halted f or the remainder of the day.

The exchanges have fixed 10-per cent circuit at 1,575 points, 15 per cent circuit at 2,350 points and 20 per cent at 3,125 points for the Sensex. Similarly, for the Nifty, the points equivalent to 10 per cent circuit are 470, for 15 per cent it is 710 po ints and for 20 per cent, it has been fixed at 950 points, the circular added. The percentages are calculated on the closing index value of the previous quarter.

These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex). At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarte r. The Sensex had ended the last quarter ended March 31 at 15,644.44 points.

Videocon bids for Motorola's mobile handset biz

Consumer electronics major Videocon Group on Tuesday said it has bid to acquire Motorola Inc's global mobile handset business.

"Yes, we have sent them an expression of interest to acquire their global mobile handset business. It is in the initial stages and will take time but we are the only one from India to do so," Videocon Group Chairman Venugopal Dhoot said.

He said the company's move to acquire Motorola's mobile phone business was in line with its expanding interest in the mobile telephony business. "We have already got licenses for offering GSM-based mobile services in all 22 circles in India and we see a synergy," Dhoot added.

Asked what could be the value of the deal he said: "It is too early to talk about numbers".

When contacted, a Motorola India spokesperson declined to confirm the development saying "we do not comment on market speculation".
According to reports, Motorola's non-profitable handset business has been estimated to be worth about $3.8 billion as evaluated by Merrill Lynch.

While Videocon itself is on the prowl, US telecom giant AT&T is eyeing a stake in its subsidiary Datacom, which has been issued a license recently for mobile services throughout India.

However, the deal is expected to take shape only after the government allocates spectrum for wireless telecom services to new players, as a mere license may not fetch a good value.

Datacom is first in the list to get spectrum, except in Delhi and Mumbai, as and when the government starts allocating the radio frequency.

Govt unveils measures to fight inflation

In a slew of measures to combat inflation, the government on Monday decided to scrap import duty on crude palm and soya oils and ban export of non-basmati rice and pulses.

The decisions were taken at a meeting of the Cabinet Committee on Prices at Prime Minister Manmohan Singh's official residence in New Delhi.

The CCP approved ban on export of non-basmati rice with immediate effect and decided to extend the ban on pulses export for one more year from Monday, Finance Minister P Chidambaram said after the meeting that lasted over three hours.

Speaking about the whole development, CPM general secretary Prakash Karat said, “The government does one thing with the right hand and the other with the left back to back.”

“The UPA has betrayed aam aadmi,” said Bharatiya Janata Party leader Ravishankar Prasad, attacking the government over the inflation menace.

However, the decisions of the government will come into effect from midnight tonight, but a notification would be issued on Tuesday, he said.

Edible oils

Chidambaram said all edible oils in crude form can be imported at zero duty, while the duty on oils in the refined form would be 7.5 per cent.

The government also decided to raise the minimum export price of Basmati rice to $1,200 per ton from $1100, to discourage export and increase availability in the domestic market. It also cut import duty on butter and clarified butter (ghee) from 40 per cent to 30 per cent.

Import duty on maize scrapped

Besides, the CCP also decided to scrap import duty on maize from 15 per cent at present.

The Union Government also advised states to impose limits on stocks of commodities under the Essential Commodities Act, besides asking steel producers not to raise prices.
Asked whether these measures would help in containing inflation, which has touched 6.68 per cent for the week ended March 15, Chidambaram said: "I sincerely hope so."

Deferred duty reduction on iron and steel

The meeting of CCP, which was attended by Commerce and Industry Minister Kamal Nath, Agriculture Minister Sharad Pawar, Railway Minister Lalu Prasad, besides Chidambaram, deferred a decision on duty reduction on iron and steel as Steel Minister Ram Vilas Paswan is away from the country.
The CCP was informed that the ministries of commerce and industry and steel are trying to bring together iron ore and steel producers to work out ways to moderate prices.

Steel producers have increased prices between Rs 3,500 to Rs 4,000 per tonne during the past three months, triggering concerns among dealers and realty developers.

The meeting between the two ministries and producers is likely to be convened on Tuesday or the day after, Chidambaram said. On maize, he said zero duty would be applicable on import of up to five lakh tons.

Stock position of various commodities
He said only 5-6 states have started collecting data on stock position of various commodities, although the Centre had empowered them 18 months ago to impose "restrictions on stock limits under the Essential Commodities Act."

"There is a large onus upon state governments to exercise the power, which they wanted and which was given to them 18 months ago," Chidambaram said.

Earlier, the Left parties gave the government two weeks to work out measures for containing prices.

The Congress, which heads the multi-party UPA government, too decided to ask the government to ban futures trading in more farm items to keep prices under check. Futures trading is already banned on staple commodities like rice, wheat and pulses - urad and tur.

Also during the day, the Consumer Affairs Ministry called a meeting of the three national commodity exchanges today to seek their views on whether a few more essential commodities like potato and edible oils be banned from the futures trading to check prices.

CPI on price rise

CPI on Tuesday described the Government's decisions aimed at curbing prices as "too little too late" and said it would make no difference to the situation.

Reacting to the decisions taken by the Cabinet Committee on Prices last night to cut down duties on food imports, party MP D Raja said the impact of these measures would take a lot of time to fructify.

He regretted that nothing has been done to streamline the public distribution system and to ensure supply of essential commodities at affordable prices to the poor.

Raja said the party would go ahead with its planned agitation on price rise on April 17-18.