NSE warns stockbrokers against executing inauthentic trades

New Delhi: The National Stock Exchange of India Ltd (NSE), India’s largest stock exchange, has warned stockbrokers against executing orders that appear not to be genuine, causing a deviation in the regular price discovery process.

It comes after a “big finger” trade on the National Stock Exchange (NSE) futures segment on Thursday, which could have resulted in a loss of Rs 200-250 crore for a brokerage firm. This could be the biggest trade mistake in the history of the internal market. A “fat finger” trade is an erroneous action caused by pressing the wrong key in the market. The NSE has issued a circular asking its trading members to refrain from entering into or executing transactions that appear inauthentic on their own behalf or on behalf of their clients, as well as from engaging in practices that result in anomalies in the order book.

They have been required to put in place appropriate internal systems and procedures to ensure that such orders/trades, including algorithmic trades, do not end up on the exchange’s trading system. “Failure to comply with the circular will result in appropriate disciplinary action…which may result in diversion from the trading terminal,” the NSE said. Few trading members placed orders on the exchange platform at prices that do not reflect the current market price and are far from the last traded price, the exchange said.

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