Mumbai: Glitches at BSE and NSE are causing trouble for investors in Offer For Sale (OFS) trading at the closing time of a trade.
“Exchanges were not able to broadcast the actual price of OFS at the closing time as it happened in the case of HDFC Asset Manag-ement Company OFS. Brokers were not able to get the actual price of the OFS after 3.20 pm and exchan-ges updated prices and volume after 30 minutes,” the source said.
According to sources, exchanges system is not able to handle such a large number of transactions at the closing time.
Main problem is due to frequent modification in the OFS bidding price and the deletion of trades in the last five minutes to avail OFS arbitrage between the cash price and the OFS’ weighted average price. It is observed that many times that the system of an exchange is not able to broadcast the correct and actual price of OFS in the closing time. It makes many retail investors suffer.
Lot of brokers who trade in their own account also participate in OFS by using their clients’ account to avail benefits of discount in the retail category.
In fact, many prop brokers offer Rs 500 per PAN of an individual retail client. By using a retail PAN number, prop brokers make offline order entries in the last five minutes of the closing time of the OFS day by uploading into the BSE/NSE order-taking OFS window, sources said.
Under Sebi rule, it is mandatory for companies to offer a minimum 10 percent reservation for retail investors. Unlike IPOs, no documents are required to bid in an OFS. All you need to provide is the quantity and price you are ready to pay for the OFS issue....