Stocks
BSE seeks extra caution by brokers to avoid flash crash

Asking its member brokers to ensure that each order is placed within the prescribed limits, BSE has also reinforced the need for trading members to submit their compliance reports to the exchange on a quarterly basis

 
Mumbai: In the wake of an erroneous order that caused flash crash of NSE (National Stock Exchange) index Nifty last month, leading bourse BSE has asked brokers to strictly adhere to its due- diligence norms and be extra careful in placing orders, reports PTI.
 
Asking its member brokers to ensure that each order is placed within the prescribed limits, BSE has also reinforced the need for trading members to submit their compliance reports to the exchange on a quarterly basis.
 
The directions have been issued by BSE in a circular to its member brokers. The NSE has already issued a similar advisory to its trading members.
 
While most of these measures are already in place, the exchanges are now seeking stricter adherence by the brokers in their compliance with these due diligence norms to avoid repeat of a situation similar to 5th October when a flash crash in NSE benchmark Nifty caused a brief trading halt in the market.
 
The sudden Nifty fall on the day was attributed to an abnormally high trade orders placed erroneously by brokerage firm Emkay Global for one of its clients.
 
In its circular, BSE said that the trading members need to review quantity and value limit for each order, user and branch value limit for each user identity and spread order quantity and value limit, before executing their orders.
 
In their quarterly compliance reports, the brokers need to provide all these details, as also the limits prescribed after assessing the risks associated with each user of the trading terminal and that of the branch.
 
The limits need to be set up after taking into account the member's capital adequacy requirements. All the limits are to be reviewed regularly and should be up-to-date in the system.
 
BSE further said all the branches or users should have defined limits and daily record of these limits needs to be preserved and should be produced before the exchange as and when the information is called for.
 
BSE said compliance would be monitored as part of annual system audit and the system auditor would verify the compliance officer's certificates confirming that the systems and its records are maintained as prescribed by the exchange.
 
It also said that quarterly compliance certificate for the three months ended December 2012 must be submitted to the exchange before 15 January 2013.
 

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NSE to hold special session for gold ETFs trading on 11th November

Dhanteras is considered an auspicious occasion to buy gold, and a lot of trading interest has been observed on that day, in gold ETF's in the past, NSE said

 
New Delhi: The National Stock Exchange (NSE) will hold a special trading session for gold exchange traded funds on 11th November on the occasion of Dhanteras, reports PTI.
 
The exchange will hold a special trading session for gold Exchange Traded Funds (ETFs) in the equity segment on the 11 November 2012 from 11am to 3.30pm.
 
There will be no trading in any other product in the equity segment, on that day, the exchange said in a statement.
 
Dhanteras is considered an auspicious occasion to buy gold, and a lot of trading interest has been observed on that day, in gold ETF's in the past, it added.
 
Trading in gold ETFs is usually higher on days like Akshaya Tritiya, Dhanteras and during festivals.
 
The gross monthly traded value on gold ETFs on NSE, stood at Rs1,195 crore, taking an average of the first seven months of 2012 (January to July 2012) as against Rs933 crore, in the first seven months of 2011, a rise of about 28%.
 
Assets under management (AUMs) for gold ETF's (on NSE and BSE) stood at Rs11,198 crore as on September 2012 as against Rs8,173 crore at the same time last year, a growth of 37%. Currently, 14 AMCs offer this product on the NSE platform.
 

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ICICI Bank offers 1% cash-back on home loan EMIs in festive scheme

Under this cash-back offer, 1% of every EMI will be returned to the customer, apart from providing the option of renewable fixed interest rate for the entire tenure free of cost

 
Mumbai: ICICI Bank has launched a limited period offer of 1% cash-back on gross EMI (equated monthly instalment) value as part of a festival scheme, reports PTI.
 
“Under this cash-back offer, 1% of every EMI will be returned to the customer, apart from providing the option of renewable fixed interest rate for the entire tenure free of cost,” the bank said.
 
Customers can choose to avail of this cash back offer either in the form of a credit to their account or in the form of a principal pay-down, it added.
 
The offer will run through the end of December for new customers. The scheme covers renewal/switchover of fixed/ floating rate loans without any processing fee, ICICI Bank executive director and retail business head Rajiv Sabharwal told reporters in a conference call.
 
The cash-back money could be credited to the borrower's account or adjusted against the principal outstanding from the third year including the first two years' dues, and by the end of the fiscal from fourth year onwards, Sabharwal said.
 
When asked whether the bank has priced in the impact of the new offering on the margins, he said, it will be negligible and that the focus is on customer retention by rewarding loyal customers.
 
As credit pick-up remains lukewarm, many banks have launched attractive schemes to woo customers in.
 
Last month, its rival Axis bank launched a scheme wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 years or more.
 
Many state-run banks, including SBI, UCO Bank, Vijaya Bank, and Central Bank, have hit the market with combo loan offers, wherein a home loan customer gets a car loan without the process fee, apart from slashing interest rates by up to 0.50% and the processing fee by half.
 
According to ICICI bank, the offer can hugely benefit the borrowers. For instance on a 20-year loan of Rs50 lakh, priced at 10.50%, a customer can gain as much as Rs1,19,806 in cash-back or if it is adjusted against the principal outstanding, the accrued benefit will be Rs3,63,538 at the end of the loan repayment.
 
Mr Sabharwal also said the offer includes an option to remain on fixed or floating rate at no cost.
 
Asked whether this could be considered a dual rate product he said, “to some degree yes, as the pricing varies from year to year, but not in the strict sense of the word as there is no differentiation in the pricing between a fixed customer and a floating rate one.”
 
When asked whether this will be considered by the regulator as a teaser product, he replied in the negative stating there are no differential rates between fixed and floating products as also there is no cut-off period for pre-payment.
 
For the first time, customers have also been given the option to renew their fixed rate loans for tenures of two/three/five years at a zero conversion fee within 30 days of completion of the initial fixed rate tenure.
 
They can also choose to renew this multiple times till the completion of the tenure mad that if a customer decides against renewing, the loan will move to floating rate by default.
 
Under the new scheme, the bank is pricing it as low as 10.25% for a two-year loan, which will increase to 10.50% in the third year and 10.75% in the fourth year.
 
In the September quarter, the bank reported its best ever quarterly numbers with a 30% rise in net profit at Rs1,956 crore. During the period the bank saw its home loan book grow at 12%.
 

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