Stocks

Freak trade: Futures of RIL, TCS, Airtel, HDFC twins open 10% higher on NSE

KS Badri Narayanan Chennai | Updated on September 14, 2021

Baffled traders vent their frustration through social media

 

Traders at the National Stock Exchange were in for a rude shock on Tuesday as the world’s premier derivative exchange saw another day of freak trades with several index heavyweights opening with a huge price gap.

Reliance Industries September futures opened with a 10 per cent gain at ₹2,616.35 on the NSE against the previous close price of ₹2,378.50. On the other hand, in spot market, RIL’s day-high was ₹2,394.

Similarly, Bharti Airtel futures too jumped to a 10 per cent gain at ₹762.15; TCS futures opened at ₹4,229.85, HDFC Bank at ₹3,314.65 and HDFC Bank at ₹1,715.70.

However, underlying stocks and Nifty traded normally without any unusual movements.

Following frequent freak trades at the NSE, some traders vented their frustrations through social media.

“#reliance Fut, #hdfcbank Fut, #HDFC Fut, #Bhartiartl Fut Is it ever going to stop ??? Will somebody take any action on it ??? or we have to start living with this. Guys pls use SL (Stop loss) rather than (Stock lending mechanism) SLM, may be this will reduce some risk,” said a tweet

Parag Yeole tweeted: “@SEBI_India should conduct a serious investigation in this freak trade matter which is very frequent these days and must penalise those who are involved.”

BoredPiper said, “I feel this could be a trap. Not the freak trades but the frequency of it. More and more such trades happen, ppl will change their mind and also accommodate the freak ones. One fine day the fall won’t be just a freak trade. That is when the real trapping will happen.”

Clarification by NSE

However, an NSE spokesperson said: “Some unusual trades were observed today which were executed by a trading member. The same is being examined by the regulatory team of the Exchange. These trades were executed within the operating range permitted by the Exchange.”

According to experts, freak trade in the derivative segment of NSE has become a recurring event ever since the exchange scrapped TER (trade execution range) since mid-August. TER is the price band within which contracts could trade. Until then, NSE had a concept of TER mechanism as a risk management measure which ensured that market orders could not be executed beyond a range.

According to a Chennai-based sub-broker, until now freak trading was largely restricted only to option segments. However, today’s event suggests that even futures are vulnerable and this could cause huge losses to traders.

 

Published on September 14, 2021

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