NSE probes freak F&O trades

(This story originally appeared in image on Sep 15, 2021)

Mumbai: The NSE is looking into a series of freak trades that took place in its futures & options (F&O) segment in contracts on five of the most traded stocks — Reliance Industries, Bharti Airtel, HDFC, HDFC Bank and TCS.

These trades were at prices that were about 10% above prevailing market price. Such trades, at times also called ‘fat finger trades’, have the potential to distort prices in the cash segment too as it often picks up signals from F&Os.

The NSE said that some unusual trades were observed during the session, which were executed by a trading member. “The same is being examined by the regulator team of the exchange,” it said. However, the trades were done within the permissible limits, it added.

Of late, there have been some cases of freak trades in the F&O segment of the market. The exchange has been working to put in place some system so that such freak trades could be avoided. Among Tuesday’s trades, RIL futures were traded at Rs 2,616 while the price of the stock was Rs 2,392. Likewise, trades in HDFC Bank futures were recorded at Rs 1,715 compared to its stock price of Rs 1,565. Similar trades were reported in Bharati Airtel, HDFC and TCS, traders said.

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