Commodities

CDSL Commodity Repository to conduct forensic audit of systems after tech scare

PALAK SHAH Mumbai | Updated on August 05, 2019 Published on August 05, 2019

The repository said it was a standalone case and numerous transactions before and after it went without any hitch   -  iStockphoto AndreyPopov

Decision comes after glitch led to a stock of cotton bales being sold to different buyers

CDSL Commodity Repository (CCRL), a company that mainly records storage and transfer of commodities traded on an exchange platform, will conduct a forensic audit of its systems.

This is after it detected an incident where ‘same’ commodity stock was sold by a party to different buyers as its system did not show a debit entry after the first trade. CCRL, in its reply to BusinessLine, confirmed that it had detected a bug in the system that could have led to the lapse but still the seller was at fault as he knew that the second transaction was wrong.

The CCRL board, which met recently in Mumbai, decided to get an audit conducted even though no other such incident was detected, sources in the know said.

Stock of cotton bales worth between ₹50 lakh and ₹70 lakh were first sold by a trader named Stambh Industries. Since the CCRL systems did not show a debit entry for the stock of cotton bales, the trader re-sold it to another party.

“The incident, a system bug in reference, was detected by CCRL. We took corrective actions to prevent any recurrence. It is relevant to note that this was a standalone case when numerous transactions before and after went without any system glitch. On being informed, the CCRL board directed the management to conduct a forensic audit and inform the incident to the Warehouse Development and Regulatory Authority (WDRA),” CCRL said.

CCRL further said that it had already got a root cause analysis conducted after the incident and got the report audited by the third party, which was then submitted to WDRA.

The technical glitch now stands corrected, the company said. How the CCRL systems did not record a debit entry for the trade is something that will be the focus of the forensic audit, experts said.

Like in the equity markets, where shares bought are held in electronic form in a demat account, commodity stocks bought and sold on exchanges are held in the electronic form by CCRL. The physical stocks are held in a warehouse.

Action against seller

Stambh Industries is a client of Karvy Commodities, which has now been asked to initiate appropriate action against the seller for ‘knowingly’ indulging in second transaction, CCRL said.

After CCRL detected the incident, Stambh Industries tried to settle the issue amicably with the buyer and refunded the principal amount. A direction has been given to the seller to return the GST amount too.

Published on August 05, 2019
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