In Re: Dealing In Futures And Options ... vs Unknown on 18 June, 2007

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Securities Appellate Tribunal

In Re: Dealing In Futures And Options ... vs Unknown on 18 June, 2007

ORDER

G. Anantharaman, Member

1. Background 1.1 The trading in futures and options (F & O) contracts on the National Stock Exchange has been engaging the attention of SEBI for quite some time now. SEBI has been noting with increasing interest the nature of transactions occurring in this trading segment of capital markets. While SEBI has been advising the stock exchanges to keep a close vigil on such transactions, SEBI, on its own, also commenced a study on the nature and scope of such transactions. This is in consonance with SEBI's avowed objective and continued efforts of protecting investor interests and safeguarding market integrity. This study and the subsequent preliminary examination was commenced with the technological support and armed with output provided by the Integrated Market Surveillance System (IMSS) of SEBI and can lay claim to be the first detailed examination by SEBI in the burgeoning F & O segment.

1.2 Perusal of trading data of the F & O segment in the NSE for the period January to March 2007 brought out some extraordinary facts. It was observed that some of brokers at NSE have been trading in futures and options contracts in a peculiar manner. The brokers were buying and selling almost equal quantities of contracts within the day and such buy/sell was synchronized in nature. In most of the cases, the same quantity and in few cases substantially the same quantity of the original trade was closed out during the day at a price which was significantly above or below the price at which the first/original transaction was executed without significant variations in the traded price of the underlying.

1.3 The observations as indicated above raised severe surveillance concerns with respect to genuine trading and price discovery in this segment as well as market integrity from an investor protection point of view. It was therefore decided to commence a preliminary examination into the trading in futures and option contracts for this period. The findings of the examination are detailed below.

2. Findings of preliminary examination in respect of reversal of trades 2.1 The trading data of the brokers was analyzed to find out those deals where there was a buy or a sell transaction for a particular client and the same was reversed on the same day. Examinations of such transactions brought out that the reversal of trade was being done either for the entire quantity of contract or substantially the same quantity with the same opposite party. Reversal of trade implies that where a buy transaction has been initially entered into by a broker for a particular client for a specific quantity, there is a corresponding sale transaction which takes place during the day for the same quantity between the same set of broker/clients and vice versa. However, it was pertinent to note that the difference in the prices at which the above two trades were executed was very significant whereas such differences were not observed in the price of the underlying shares. It was also observed that there were several brokers who were trading in the F & O contracts in a synchronized manner during the period. Additionally, it was also seen that one of the parties to the transactions apparently had substantial gains while the other party suffered losses in such transactions. Such gains and losses are termed as Close out Difference (COD) and transactions are called reversal of trades.

2.2 The findings of the preliminary examination has brought out that the F & O segment is awash with transactions undertaken by broker and clients which essentially are non genuine. Such transactions were in the nature of fictitious transactions resulting in creation of misleading appearance of trading in these options. It was also brought out that the brokers have transacted in both type of contracts-futures as well as option contracts. Further, it was also seen that in several cases that the same broker was appearing both on the buy side as well as the sell side of the transaction. The transactions can be diagrammatically represented as under

Case 1: Same broker acting on behalf of buyer as well as seller In the above situation, the same broker is undertaking transactions on behalf of both the buying as well as selling clients. He is buying say X number of contracts at a price P at time T1 and thereafter reversing the transactions on behalf of the same set of clients by selling X number of contracts at price P1 at time T1.

Case 2: Same broker acting on behalf of buyer and sellers In the above situation, the brokers are different. One broker is buying say X number of contracts at a price P at time T1 through the selling broker. Thereafter, the transactions are reversed and the selling broker now becomes the buying broker for his client (who had sold in the first leg of the transaction) by buying again X number of contracts at price P1 at time T1 Curiously, such transactions also resulted in unusual profit and loss for these entities. The motive of such transactions was not genuine purchase and sale but rather seemed to be for creating artificial market for trading in the futures & options and booking profit/losses on such transactions. As is being brought out, the transactions resulted in substantial book losses for one client and profit for another client. The range and scope with which such transactions have been carried out seems to suggest that there is a thriving market for such transfer of profits /losses providing the opportunity to avail of favourable tax assessments.

2.3 For the purpose of preliminary examination, those brokers whose cumulative reversal differences exceeded Rs.25 lakhs or those who had undertaken more than 20 reversal transactions during the period -January 2007 to March 2007 were short listed. The reversal differences were calculated on an approximate basis by taking into consideration the difference in prices for the first and the subsequent counter trades The transactions undertaken are discussed herein under 2.4 Findings with respect to brokers who were seen to have been transacting on both sides of the transactions in Options and Futures contract: The findings of the preliminary examination brought out the following 5 brokers in this regard.

No Broker Jan Feb March Total COD NR COD NR COD NR COD NR

1. Kumar Share Brokers Ltd.

19.86 112 19.86 112

2. CPR Capital Services Ltd.

16.25 20 25.87 16 12.36 7 54.48 43

3. SMC Global Securities Ltd.

26.09 8 44.58 14 2.67 4 73.34 26

4. Khandwala Int. Fin. Ser P Ltd 23.93 4 32.36 4 44.19 10 100.48 18

5. Shilpa Stock Brokers P Ltd.

45.09 16 45.09 16 Total 66.27 32 102.81 34 124.17 149 293.25 215 Legends: COD - Close out /Reversal difference (Rs. lacs) NR - Number of Reversal transaction 2.5 The total COD across 5 brokers is Rs. 293.25 and has witnessed a sharp increase over the months January to March 2007. This trend may continue if unchecked. It is noted from the above table that stock broker - Kumar Share Brokers Ltd has undertaken 112 reversal transactions in the month of March 2007 resulting in an aggregate close out difference of Rs 19.86 lakhs. This broker has undertaken maximum no of reversals during the period - 112 out of a total of 215 reversals. The total COD across 5 brokers is Rs 293.25 lakhs across 215 reversals. These reversals were seen to have been carried out across the F & O segment and mostly in stock futures, stock options and index options.

2.6 Similarly, broker -CPR Capital Services Ltd has undertaken 43 reversals across the period resulting in an aggregate close out difference of Rs 54.48 lakhs. Broker -SMC Global Securities Ltd. has undertaken 26 reversals across the period resulting in an aggregate close out difference of Rs 73.34 lakhs. Broker -Khandwala Int. Fin. Ser P Ltd has undertaken 18 reversals across the period resulting in an aggregate close out difference of Rs 100.48 lakhs. Broker -Shilpa Stock Brokers Pvt. Ltd. has undertaken 16 reversals across the period resulting in an aggregate close out difference of Rs 45.09 lakhs.

2.7 It has further been brought out that such reversal transactions comprised as high as 50% of the market volume and on many occasions, it even comprised 100% of the total market volume in the market segment in the particular instrument for the day. Transactions were carried out in options in a large number of scrips across the market. Transactions were also seen to be carried out mostly in illiquid options, i.e. options where transactions of few identified brokers made up almost the entire trading volume. Similar pattern was noticed in stock futures and index options as well. For the purpose of explanations, illustrative reversal transactions undertaken by the aforesaid brokers during the entire period which comprised significant percentage (50% to 100%) of the market volume or which were reversed during a very short span of time are given below 2.8 Details transactions of selected brokers:

2.8.1 Kumar Share brokers Ltd. The total close out /reversal difference is Rs. 19.86 lakhs across 112 reversals done during the month of March 2007. All the above transactions were done on behalf of clients. Illustrative transaction is given below Transactions in UTI bank American Type put option (39171UTIBANK39198PA490) carried out on 30/3/07 for expiry on 26/4/07 - COD Rs 54000 Buy Strike Price Trade Time (hh:mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty %to Mkt Gross Traded Value Rs Sell Client Name Buy Client Name 490 15:15:32 15 489.2 4500 50 67,500 Ruchi mehrotra Poonam Narendra chaudhary 490 15:15:55 3 489.2 4500 50 13,500 Poonam Narendra Chaudhary Ruchi Mehrotra Total 9000 100 81,000 From the above table it may be observed that broker Kumar Shares has dealt on behalf of its clients Ruchi Mehrotra and Poonam Narendra Chaudhary. The broker has initially entered into a buy transaction for 4500 options @Rs. 15 for his client Poonam Narendra Chaudhary and sell transaction for client Ruchi Mehrotra at 15:15:32 hrs and after 23 seconds i.e. 15:15:55 hrs , the broker has reversed the positions for the clients (closed out their respective positions) @ a price Rs 3. The close out difference is Rs 54000 (Rs 15 less Rs 3 times 4500 # of options).

It is also pertinent to note that there was no change in the price of underlying when both the transactions were undertaken and it remained at Rs 489.2. It was also observed that these transactions constituted 100% of the market volume in that particular contract at the exchange for the day.

Similar other transactions were carried out by the broker for other clients during the period which are summarised below Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity (buy +Sell) total % to Market Gross CLOSE OUT DIFFERENCE (Rs.) 21-Mar-07 GMRINFRA 3/29/2007 CA 4000 100 21,500 21-Mar-07 CAIRN 3/29/2007 CA 25000 100 60,000 22-Mar-07 GMRINFRA 3/29/2007 CA 10000 90.9 44,000 22-Mar-07 VOLTAS 3/29/2007 CA 18000 100 61,200 22-Mar-07 CAIRN 3/29/2007 CA 7,000 100 37,000 22-Mar-07 BHARATFORG 3/29/2007 CA 10000 90.9 29,000 23-Mar-07 GDL 3/29/2007 CA 10000 100 31,000 23-Mar-07 HCLTECH 3/29/2007 CA 7800 99.97 30,680 26-Mar-07 MCDOWELL-N 3/29/2007 CA 4000 100 86,500 26-Mar-07 INDUSINDBK 3/29/2007 CA 34650 90 150,150 26-Mar-07 DABUR 3/29/2007 CA 10800 100 20,925 26-Mar-07 ALBK 3/29/2007 PA 14700 100.02 109,025 30-Mar-07 NICOLASPIR 4/26/2007 PA 20900 100 90,915 30-Mar-07 IOB 4/26/2007 PA 47200 100 179,803 30-Mar-07 GUJALKALI 4/26/2007 PA 14000 100 46,900 30-Mar-07 FEDERALBNK 4/26/2007 PA 13000 100 52,000 30-Mar-07 CORPBANK 4/26/2007 CA 7200 37.5 31,800 30-Mar-07 UTIBANK 4/26/2007 PA 9000 100 54,000 28-Mar-07 BATAINDIA 3/29/2007 CA 8400 100 31,290 28-Mar-07 ANDHRABANK 3/29/2007 PA 9/200 100 79,580 29-Mar-07 DA BUR 3/29/2007 PA 27000 40 113,400 28-Mar-07 CAIRN 3/29/2007 CA 15000 100.02 31,625 28-Mar-07 MRPL 3/29/2007 PA 71200 100 139,730 28-Mar-07 ORCHIDCHEM 3/29/2007 CA 10500 45.5 34,650 28-Mar-07 VIJAYABANK 3/29/2007 CA 82800 92.28 131,100 29-Mar-07 MCDOWELL-N 3/29/2007 CA 4000 100 17,913 29-Mar-07 ORCHIDCHEM 3/29/2007 CA 10500 90.9 40,950 29-Mar-07 BATAINDIA 3/29/2007 PA 16800 100 49,770 29-Mar-07 MATRIXLABS 3/29/2007 PA 15000 99.97 67,375 29-Mar-07 GDL 3/29/2007 CA 10000 100 33,800 29-Mar-07 JSWSTEEL 3/29/2007 CA 6600 99.99 39,490 29-Mar-07 CORPBANK 3/29/2007 CA 9600 36.38 39,600 19,86,670 It is noted from the above table that the broker has transacted in as many as 23 options contracts (both call and put) in the month of March 2007. It is further observed that gross traded quantity by the broker is usually a significant percentage (more than 90%) of market gross quantity on that date.

2.8.2 CPR Capital Services Ltd.

The total close out difference is Rs. 54.49 lakhs across 43 reversals done during the period January to March 2007. Illustrative transactions are given below Transactions in BEML stock futures (39135BEML39198) carried out on 22/2/07 for expiry on 26/4/07 - COD Rs 310000 Trade Time (hh:mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy Client Name Sell Client Name 12:50:02 1,148.00 1,166.95 5,000.00 47.62 5,740,000 Gaurav verma Suresh bharrat 12:54:54 1,210.00 1,165.00 1,165.00 47.62 6,050,000 Suresh bharrat Gaurav verma Total 10,000.00 95.24 11,790,000 From the above table, it may be observed that broker CPR Capital Services has dealt on behalf of its clients Gaurav Verma and Suresh Bharrat. The broker has initially entered into a buy transaction for 5000 stock futures @Rs. 1148 for his client Gaurav Verma and sale transaction for client Suresh Bharrat at 12:50:02 hrs and after 4 min & 52 seconds i.e. 12:54:54 hrs, the broker has reversed the positions (closed out their respective positions) @ a price Rs 1210. The close out difference is Rs 310000 (Rs 1210 less Rs 1148 times 5000 # of Stock futures).

It is also pertinent to note that there was no significant change in the price of underlying when both the transactions were undertaken and it remained at level of Rs 1165-1166.95. It was also observed that these transactions constitute 95.24% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the broker for other clients during the period are summarised below Trade Date Symbol Expiry Date Option Type Trade Qty % to Market Gross Close out diff 11-Jan-07 KTKBANK (140) 25-Jan-07 PA 500 100.00 29000 11-Jan-07 KTKBANK (150) 25-Jan-07 PA 5000 100.00 25000 31-Jan-07 MCDOWELL-N 29-Mar-07 FF 7000 31.82 87500 29-Jan-07 SOBHA 29-Mar-07 FF 16800 100.00 281610 22-Jan-07 IFCI 29-Mar-07 FF 63000 50.00 47250 23-Jan-07 SUZLON 29-Mar-07 FF 6800 42.84 116010 31-Jan-07 WOCKPHARMA 29-Mar-07 FF 24000 47.60 179400 22-Jan-07 LT 29-Mar-07 FF 4000 76.92 101500 25-Jan-07 GMRINFRA 29-Mar-07 FF 20000 60.60 73500 23-Jan-07 TCS 29-Mar-07 FF 1500 66.66 17813 25-Jan-07 ESSAROIL 29-Mar-07 FF 90400 15.54 194360 22-Jan-07 IDBI 29-Mar-07 FF 38400 72.72 90240 25-Jan-07 INDIACEM 29-Mar-07 FF 23200 72.72 43500 25-Jan-07 IOB 29-Mar-07 FF 59000 83.33 85550 25-Jan-07 POLARIS 29-Mar-07 FF 22400 88.88 93520 25-Jan-07 TVSMOTOR 29-Mar-07 FF 47200 59.20 29500 24-Jan-07 VIJAYABANK 29-Mar-07 FF 27600 80.00 15180 31-Jan-07 PATNI 3/29/2007 FF 10400 25.00 115180 20-Feb-07 ACC 4/26/2007 FF 15000 95.24 397500 5-Feb-07 BEML 3/29/2007 FF 10000 57.14 95000 22-Feb-07 BEML 4/26/2007 FF 10000 95.24 310000 26-Feb-07 BOMDYEING 4/26/2007 FF 14000 57.56 414000 7-Feb-07 CORPBANK 3/29/2007 FF 38400 50.00 192000 1-Feb-07 CROMPGREAV 3/29/2007 FF 18000 20.68 105300 19-Feb-07 INDHOTEL 4/26/2007 FF 28000 88.88 101500 21-Feb-07 JINDALSTEL 4/26/2007 FF 42000 70.56 742000 23-Feb-07 MCDOWELL-N 4/26/2007 FF 5000 90.90 97500 22-Feb-07 PUNJLLOYD 4/26/2007 FF 69000 68.96 69000 19-Feb-07 SUZLON 4/26/2007 FF 4000 76.92 64000 7-Mar-07 AUROPHARMA 4/26/2007 FF 7000 68.96 147000 6-Mar-07 BOMDYEING 4/26/2007 FF 6000 24.70 126000 5-Mar-07 BOMDYEING 4/26/2007 FF 60 24.40 105000 9-Mar-07 PUNJLLOYD 4/26/2007 FF 60 71.42 177000 15-Mar-07 I-FLEX 4/26/2007 FF 60 48.20 144000 6-Mar-07 A BAN 4/26/2007 FF 12000 56.60 537000 5449412.50 It is seen from the above table that the broker has transacted in 2 options contracts and 29 stock futures' contracts during the period January to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (more than 90%) of market gross quantity on that date.

2.8.3 SMC Global Securities Ltd.

The total close out difference is Rs. 73.35 lakhs across 26 reversals during the period January to March 2007. All the above transactions were done on behalf of clients. Illustrative transactions are given below Transactions in PNB Ltd - stock futures (39148PNB39233FF0) carried out on 7/3/2007 for expiry on 31/5/2007 - COD Rs 46200 Trade Time (hh:mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty % to Mkt Gross Traded Value Rs Buy Client Name Sell Client Name 14:05:30 391 423.45 600 50 234,600.00 Daga Indra Kumar Mall Shiw Narayan 14:05:39 468 423 600 80 280,800.00 Mall Shiw Narayan Daga Indra kumar Total 1200 1200 515,400.00 From the above table it may be noted that broker SMC Global Securities has dealt on behalf of its clients Daga Indra Kumar and Mall Shiw Narayan. The broker has initially entered into a buy transaction for 600 stock futures @Rs. 391 for his client Daga Indra Kumar and sale transaction for client Mall Shiw Narayan at 14:05:30 hrs and after only 9 seconds i.e. 14:05:39 hrs , the broker has reversed the positions (closed out their respective positions) @ a price Rs 468. The close out difference is Rs 46200 (Rs 468 less Rs 391 times 600 # of Stock futures).

It is also pertinent to note that there was no significant change in the price of underlying when both the transactions were undertaken and it remained at levels of Rs 423-423.45. It was also seen that these transactions constituted 100% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the broker for other clients during the period are summarised below Trade Date Symbol Expiry Date Option Type Trade Qty %to Market Gross Close out diff 5-Jan-07 IDBI 25-Jan-07 CA 9600 50.00 76800 17-Jan-07 ULTRACEMCO 29-Mar-07 FF 8000 90.90 232000 31-Jan-07 IOC 29-Mar-07 FF 24000 95.24 396000 23-Jan-07 SOBHA 29-Mar-07 FF 5600 100.00 249200 23-Jan-07 SUNPHARMA 29-Mar-07 FF 6300 100.00 292950 31-Jan-07 WOCKPHARMA 29-Mar-07 FF 24000 47.62 360000 22-Jan-07 STAR 29-Mar-07 FF 17000 100.00 586500 31-Jan-07 PATNI 3/29/2007 FF 15600 37.50 416000 26-Mar-07 TATAPOWER 5/31/2007 FF 800 50.00 28000 7-Mar-07 PNB 5/31/2007 FF 1/200 100.00 46200 26-Mar-07 COLGATE 5/31/2007 FF 0.00 50.00 73500 26-Mar-07 IOC 5/31/2007 FF 2400 33.34 120000 5-Feb-07 BEML 3/29/2007 FF 7500 42.86 335250 5-Feb-07 FEDERALBNK 3/29/2007 FF 390 83.34 526500 6-Feb-07 GUJALKALI 3/29/2007 FF 84000 85.72 409500 6-Feb-07 HTMT 3/29/2007 FF 24000 23.96 528000 20-Feb-07 HTMT 4/26/2007 FF 00.00 100.00 233400 21-Feb-07 JINDALSTEL 4/26/2007 FF 5000 29.40 512500 1-Feb-07 LUPIN 3/29/2007 FF 1050 33.34 105000 21-Feb-07 TATAPOWER 4/26/2007 FF 32000 1008000 1008000 19-Feb-07 TITAN 4/26/2007 FF 5754 100.00 215775 20-Feb-07 ULTRACEMCO 4/26/2007 FF 12000 100.00 498000 6-Feb-07 IDBI 3/29/2007 CA 38400 100.00 86640 7335715 It is seen from the above table that the broker has transacted in 2 options contracts and 21 stock futures' contracts during the period January to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (more than 50%) of market gross quantity.

2.8.4 Khandwala Integrated Financial Services Ltd (KMPL).

The total close out difference is Rs 100.48 lakhs across 18 reversals done during the period January to March 2007. All the above transactions were done on behalf of clients. Illustrative transactions are given below Transactions in Ultra Cement Company Ltd - stock futures carried out on 23/1/07 for expiry on 29/3/2007 - COD Rs 1030000 Trade Time (hh:mm:ss) Trade Price Rs Cash Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy Client Name Sell Client Name 11:52:34 1158.00 1062.85 50.00 50.00 11580000 Shah Chirag Kirtikumar Jaykumar Kamleshkumar Shah 15:10:36 1055.00 1055.00 50.00 50.00 10550000 Jaykumar Kamleshkumar Shah Shah Chirag kirtikumar Total 20000 100 From the above table it may be noted that broker Khandwala Integrated Finance has dealt on behalf of its clients Shah Chirag Kirtikumar and Jaykumar Kamlesh Kumar Shah. The broker has initially entered into a buy transaction for 10000 stock futures @Rs. 1158 for his client Shah Chirag Kirtikumar and sale transaction for client Jaykumar Kamleshkumar Shah at 11:52:34 hrs. Thereafter, at 15:10:36 hrs, the broker has reversed the positions (closed out their respective positions) @ a price Rs 1055. The close out difference is Rs 1030000 (Rs 1158 less Rs 1055 times 10000 # of Stock futures).

It is also pertinent to note that there was no significant change in the price of underlying when both the transactions were undertaken and it remained at Rs 1061-1062.85. It was also seen that these transactions constituted 100% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the broker for other clients during the period are summarised below Trade Date Symbol Expiry Date Option Type Trade Qty % to Market Gross Close out diff 23-Jan-07 SUZLON 29-Mar-07 FF 12800.00 65.3 716800.00 16-Jan-07 GUJAMBCEM 29-Mar-07 FF 4124.00 50.00 22991.30 31-Jan-07 AMTEKAUTO 29-Mar-07 FF 48000.00 98.76 624000.00 23-Jan-07 ULTRACEMCO 29-Mar-07 FF 20000.00 100.00 1030000.00 1-Feb-07 AUROPHARMA 3/29/2007 FF 28,000.00 97.56 686000.00 2-Feb-07 BOMDYEING 3/29/2007 FF 6,000.00 52.64 117000.00 1-Feb-07 CROMPGREAV 3/29/2007 FF 54,000.00 62.06 648000.00 6-Feb-07 HTMT 3/29/2007 FF 42,000.00 41.92 1785000.00 21-Mar-07 AMTEKAUTO 4/26/2007 FF 12,000.00 27.78 42,600.00 9-Mar-07 PATNI 4/26/2007 FF 45,500.00 77.78 728,000.00 9-Mar-07 FEDERALBNK 4/26/2007 FF 26,000.00 47.62 468,000.00 9-Mar-07 ALOKTEXT 4/26/2007 FF 40200 37.50 48240 9-Mar-07 AUROPHARMA 4/26/2007 FF 28000 50.00 840000 7-Mar-07 CESC 4/26/2007 FF 66000 42.86 1122000 8-Mar-07 CUMMINSIND 4/26/2007 FF 57000 50.00 555750 6-Mar-07 HINDPETRO 4/26/2007 FF 26000 47.62 87750 30-Mar-07 IPCL 5/31/2007 FF 41800 32.20 179740 14-Mar-07 NICOLASPIR 4/26/2007 FF 41800 40.00 346940 10048811.30 It is seen from the above table that the broker has transacted in 18 stock futures' contracts during the period January to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (more than 50%) of market gross quantity.

2.8.5 Shilpa Stock Brokers Pvt. Ltd.

The total close out difference is Rs 45.09 lakhs across 16 reversals done during the period January to March 2007. All the above transactions were done on behalf of clients. Illustrative transactions are given below Transactions in Bongaigoan Refineries (39163BONGAIREFN39233FF0) stock futures carried out on 22/3/07 for expiry on 31/5/2007 - COD Rs 74,250 Trade Time (hh:mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy Client Name Sell Client Name 13:04:44 41.1 42.15 22,500 29.41 924,750 Nehas patni P k s holdings 14:09:33 44.4 42.1 22,500 29.41 999,000 P k s holdings Nehas patni Total 45,000 58.82 From the above table it may be observed that broker has dealt on behalf of its clients Neha S Patni and P K S Holdings. The broker has initially entered into a buy transaction for 22500 stock futures @Rs. 41.1 for his client Neha s Patni and sale transaction for client P k s holdings at 13:04:44 hrs. Thereafter, at 14:09:33 hrs, the broker has reversed the positions (closed out their respective positions) @ a price Rs 44.4. The close out difference is Rs 74250 (Rs 44.4 less Rs 41.1 times 22500 # of Stock futures).

It is also pertinent to note that there was no significant change in the price of underlying when both the transactions were undertaken and it remained at Rs 42.15-42.1. It was also seen that these transactions constituted 58.82% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the broker for other clients during the period are summarised below Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity %to Market Gross CLOSE OUT DIFFERENCE 23-Mar-07 ALBK 5/31/2007 FF 29,400.00 26.08 71,295 16-Mar-07 AMTEKAUTO 4/26/2007 FF 12,000.00 39.22 49,800 28-Mar-07 BEML 5/31/2007 FF 10,000.00 25.98 169,250 12-Mar-07 CESC 4/26/2007 FF 22,000.00 37.72 103,730 22-Mar-07 BONGAIREFN 5/31/2007 FF 45,000.00 29.41 74,250 22-Mar-07 ULTRACEMCO 5/31/2007 FF 8,000.00 43.96 116,000 12-Mar-07 PATNI 4/26/2007 FF 13,000.00 28.58 2,030,242 30-Mar-07 GDL 5/31/2007 FF 20,000.00 29.41 42,500 20-Mar-07 ANDHRABANK 4/26/2007 FF 46000 33.33 72450 22-Mar-07 BATAINDIA 5/31/2007 FF 0.0010 50.00 101850 19-Mar-07 CORPBANK 4/26/2007 FF 24000 27.78 82800 21-Mar-07 CORPBANK 5/31/2007 FF 300 32.05 1278300 22-Mar-07 FEDERALBNK 4/26/2007 FF 26000 30.30 79300 13-Mar-07 GUJALKALI 4/26/2007 FF 28000 43.48 67900 20-Mar-07 INDIANB 4/26/2007 FF 44000 40.00 68200 20-Mar-07 TRIVENI 4/26/2007 FF 77000 31.25 102025 4,509,892 It is seen from the above table that the broker has transacted in 16 stock futures' contracts during the period January to March 2007. It is also seen that gross traded quantity by the broker is usually a significant percentage (more than 30%) of market gross quantity.

2.9 Findings with respect to brokers who were seen to have been transacting on one side i.e., with different counter party brokers:

As indicated, earlier it was also observed that transactions were carried out where the counterparty brokers are different. Details of brokers who have undertaken such transactions during the period January to March 2007 resulting in COD in excess of Rs 25 lakhs or those who had undertaken more than 20 reversal transactions is given below:

No Broker Jan Feb March Total COD NR COD NR COD NR COD NR

1.

Ashika Stock Broking Limited 2.24 5 38.43 23 114.31 45 154.98 73

2. Vibrant Securities Pvt. Ltd.

14.8 29 143.76 37 158.56 66

3. Systematix Shares & Stk (India) Ltd 14.8 29 29.05 33 43.85 62

4. Angel Capital & Debt Market Lt 33.6 56 33.6 56

5. Steel City Securities Ltd.

25.71 42 25.71 42

6. Indiabulls Securities Ltd.

6.91 3 2.18 3 26.34 17 35.43 23

7. Prashant Jayantilal Patel 118.58 19 118.58 19

8. Psj Securities P td.

0.76 2 44.59 14 45.35 16

9. Manu Stock Broking (P) Ltd 33.7 7 63.75 7 97.45 14

10. Pratibhuti Vinihit Ltd.

39.27 10 39.27 10 Total 9.15 8 104.67 93 638.96 280 752.78 381 The total COD across 10 brokers is Rs. 752.78 and has witnessed a sharp increase over the months January to March 2007. This trend may continue if unchecked. It is noted from the above that stock Broker -Ashika Stock Broking Limited has undertaken 73 reversals across the period resulting in an aggregate close out difference of Rs 154.98 lakhs. The total COD across 10 brokers is Rs 752.78 lakhs. These reversals were seen to have been carried out across the F & O segment and mostly in stock futures, stock options and index options.

2.10 Similarly, broker -Vibrant Securities Pvt. Ltd has undertaken 66 reversals across the period resulting in an aggregate close out difference of Rs 158.56 lakhs. Broker -Systematix Shares & Stk (India) Ltd has undertaken 62 reversals across the period resulting in an aggregate close out difference of Rs 43.85 lakhs. Broker - Angel Capital And Debt Market Limited has undertaken 56 reversal transactions in the month of March 2007 resulting in an aggregate close out difference of Rs 33.6 lakhs. Broker -Steel City Securities Ltd has undertaken 42 reversals across the period resulting in an aggregate close out difference of Rs 25.71 lakhs. Broker -Indiabulls Securities Ltd has undertaken 23 reversals across the period resulting in an aggregate close out difference of Rs 35.43 lakhs. Broker -Prashant Jayantilal Patel has undertaken 19 reversals across the period resulting in an aggregate close out difference of Rs 118.58 lakhs. Broker -PSJ Securities Pvt. Ltd has undertaken 16 reversals across the period resulting in an aggregate close out difference of Rs 45.35 lakhs. Broker -Manu Stock Broking (P) Ltd. has undertaken 14 reversals across the period resulting in an aggregate close out difference of Rs 97.45 lakhs. Broker -Pratibhuti Vinihit Ltd. has undertaken 10 reversals across the period resulting in an aggregate close out difference of Rs 39.27 lakhs.

2.11 It has further been brought out that such close out/reversal transaction comprised as high as 50% of the market volume and on many occasions, it even comprised 100% of the total market volume in the market segment in the particular instrument for the day. Transactions were carried out in options in a large number of scrips across the market. Transactions were also seen to have been carried out mostly in illiquid options, i.e. options where transactions of few identified brokers made up almost the entire trading volume. Similar pattern was observed in stock futures and index options as well. For the purpose of explanations, illustrative reversal transactions undertaken by the above brokers during the entire period which comprised significant percentage (50% to 100%) of the market volume during a very short span of time are given below 2.11.1 Ashika Stock Broking Ltd and Manu Stock Brokers Ltd.

Ashika Stock Broking Limited (dealing in Stock Options) has undertaken 73 reversals across the period resulting in an aggregate close out difference of Rs 154.98 lakhs. Further, Manu Stock Broking (P) Ltd. has undertaken 14 reversals across the period resulting in an aggregate close out difference of Rs 97.45 lakhs.

Illustrative Transactions by Ashika and Manu Stock broking in Triveni Engineering Stock Futures (39143TRIVENI39198FF0) executed on 2/3/07 for expiry on 26/4/07 - COD Rs 587,125 Trade Time (hh:mm:ss) Trade Price Rs Cash Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy broker Name Sell broker Name Buy Client Name Sell Client Name 13:22:49 44.25 45.05 192,500 24.27 8,518,125 Manu Stock Broking (P) Ltd Ashika Stock Broking Limited Manu Vyapar Pvt. Ltd.

Amit Business Ltd 13:23:24 47.3 45 192,500 24.27 9,105,250 Ashika Stock Broking Limited Manu Stock Broking (P) Ltd Amit Business Ltd Manu Vyapar Pvt. Ltd.

385,000.00 48.54 17,623,375 From the above table, it may be observed that the buying broker - Manu Stock Broking has dealt on behalf of its clients M/s Manu Vyapar. The broker has entered into a buy transaction for 192500 stock futures @Rs. 44.25 for his client at 13:22:49 hrs. The selling broker is Ashika Stock Broking Limited who is selling for client Amit Business Ltd. Immediately after 35 seconds i.e. at 13:23:24 hrs, the transactions are reversed with the same counterparty broker /client for the same quantity but for a price of Rs 47.3. The close out difference is Rs 587,125 (Rs 47.3 less Rs 44.25 times 192500 # of futures).

It is also pertinent to note that there was no change in the price of underlying when both the transactions were undertaken and it remained at Rs 45-45.05. It was also seen that these transactions constituted 48.54% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period are summarised below Summary of transactions of Ashika Stock Brokers Trade Date Symbol Expiry Date Option Type Trade Qty %to Market Gross Close out diff 22-Jan-07 BANKINDIA 22-Feb-07 CA 15200 50.00 74480 22-Jan-07 IDFC 25-Jan-07 CA 11800 50.00 64900 22-Jan-07 NDTV 25-Jan-07 CA 8800 75.00 44000 23-Jan-07 RANBAXY 29-Mar-07 FF 0.00 50.00 40880 27-Feb-07 RENUKA 4/26/2007 FF 50000 47.62 500000 27-Feb-07 SRF 4/26/2007 FF 750000 50.00 2317500 6-Feb-07 ESCORTS 2/22/2007 CA 19200 50.00 182400 9-Feb-07 ESCORTS 2/22/2007 CA 19200 50.00 80640 6-Feb-07 NAGARFERT 3/29/2007 CA 56000 50.00 42000 8-Feb-07 TTML 2/22/2007 CA 83600 44.44 50160 15-Feb-07 IDBI 2/22/2007 PA 9600 33.34 43200 15-Feb-07 IDFC 2/22/2007 PA 11800 50.00 47200 22-Feb-07 ESCORTS 2/22/2007 CA 9600 33.34 37920 23-Feb-07 ESCORTS 3/29/2007 CA 19200 36.37 57600 23-Feb-07 GRASIM 3/29/2007 CA 21000 49.20 379400 27-Feb-07 BANKINDIA 3/29/2007 PA 38000 50.00 105450 2-Mar-07 ESCORTS 3/29/2007 CA 19200 50.00 67200 8-Mar-07 GNFC 3/29/2007 PA 5900 50.00 16668 8-Mar-07 ICICIBANK 3/29/2007 PA .00420 50.00 42000 9-Mar-07 ARVINDMILL 3/29/2007 PA 43000 50.00 62350 12-Mar-07 ARVINDMILL 3/29/2007 PA 86000 50.00 133300 12-Mar-07 GNFC 3/29/2007 PA 5900 50.00 21683 12-Mar-07 NEYVELILIG 3/29/2007 CA 59000 50.00 97350 13-Mar-07 POLARIS 3/29/2007 CA 28000 50.00 98000 22-Mar-07 ARVINDMILL 3/29/2007 PA 8600 50.00 16555 30-Mar-07 TCS 4/26/2007 CA 5000 38.45 156000 30-Mar-07 I-FLEX 4/26/2007 CA 1800 50.00 89100 30-Mar-07 ESCORTS 4/26/2007 CA 0.00160 50.00 160080 28-Mar-07 ESCORTS 4/26/2007 CA 48000 50.00 137760 29-Mar-07 ESCORTS 4/26/2007 CA 38400 50.01 62400 14-Mar-07 ANDHRABANK 4/26/2007 FF 138000 42.86 89700 2-Mar-07 TRIVENI 4/26/2007 FF 385000 48.54 587125 2-Mar-07 ALBK 4/26/2007 FF 980000 49.88 967750 8-Mar-07 ALBK 4/26/2007 FF 49000 50.00 94325 9-Mar-07 ALBK 4/26/2007 FF 98000 34.48 176400 14-Mar-07 ALBK 4/26/2007 FF 98000 47.62 176400 8-Mar-07 BATAINDIA 4/26/2007 FF 420 37.74 189000 9-Mar-07 BONGAIREFN 4/26/2007 FF 90000 35.71 58500 2-Mar-07 CHAMBLFERT 4/26/2007 FF 552000 48.78 469200 9-Mar-07 CHAMBLFERT 4/26/2007 FF 138000 35.71 169050 2-Mar-07 CORPBANK 4/26/2007 FF 2640000 43.67 240000 8-Mar-07 ESSAROIL 4/26/2007 FF 45200 30.77 31640 14-Mar-07 ESSAROIL 4/26/2007 FF 113000 47.62 70625 2-Mar-07 GDL 4/26/2007 FF 645000 45.05 645000 12-Mar-07 GNFC 4/26/2007 FF 118000 35.09 91450 8-Mar-07 GUJALKALI 4/26/2007 FF 56000 33.33 99400 12-Mar-07 INDIANB 4/26/2007 FF 88000 40.00 220000 2-Mar-07 IOB 4/26/2007 FF 236000 48.19 436600 2-Mar-07 JSTAINLESS 4/26/2007 FF 400 34.48 115000 2-Mar-07 KTKBANK 4/26/2007 FF 250000 45.45 550000 2-Mar-07 MRPL 4/26/2007 FF 534000 34.09 320400 2-Mar-07 MRPL 4/26/2007 FF 35600 33.33 23140 2-Mar-07 NAGARFERT 4/26/2007 FF 560000 35.09 168000 2-Mar-07 NICOLASPIR 4/26/2007 FF 104500 50.00 1196525 14-Mar-07 SCI 4/26/2007 FF 252000 33.33 252000 12-Mar-07 SYNDIBANK 4/26/2007 FF 152000 47.62 212800 12-Mar-07 TRIVENI 4/26/2007 FF 154000 45.45 161700 14-Mar-07 TVSMOTOR 3/29/2007 PA 29500 33.33 59000 15498906 It is seen from the above table that the broker has transacted in 43 options /futures during the period January to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (more than 50%) of market gross quantity.

Summary of transactions of Manu Stock Broking Trade Date Symbol Expiry Date Option Type Trade Qty %to Market Gross Close out diff 27-Feb-07 PATNI 4/26/2007 FF 13,000.00 16.66 552500 27-Feb-07 RENUKA 4/26/2007 FF 50,000 47.62 500000 27-Feb-07 SRF 4/26/2007 FF 750,000 50,00 2317500 2-Mar-07 TRIVENI 4/26/2007 FF 385,000 48.54 587,125 2-Mar-07 CORPBANK 4/26/2007 FF 2640000 43.67 240000 2-Mar-07 GDL 4/26/2007 FF 645000 45.05 645000 2-Mar-07 IOB 4/26/2007 FF 236000 48.19 436600 2-Mar-07 KTKBANK 4/26/2007 FF 250000 45.45 550000 2-Mar-07 MRPL 4/26/2007 FF 534000 34.09 320400 2-Mar-07 NICOLASPIR 4/26/2007 FF 104500 50.00 1196525 9745650 It is seen from the above table that the broker has transacted in 10 stock futures' contracts during the period February to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (around 50%) of market gross quantity on that date.

2.11.2 Vibrant Securities Pvt. Ltd. and Systematix Shares And Stocks (India) Limited : For broker - Vibrant Securities, the total close out difference is Rs. 158.56 lakhs across 66 reversal done during month of February 2007 and March 2007. For broker - Systematix Shares, the total close out difference is Rs.43.85 lakhs across 62 reversals done.

Illustrative Transactions by brokers - Vibrant and Systematix in GDL Call Options (39142GDL39170CA160) executed on 1/3/07 for expiry on 29/3/07 -COD Rs 115000 Buy Strike Price Trade Time (hh: mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy Broker Selling brokers Buy Client Name Sell Client 160 12:24:20 17 163.3 10000 44.25 17000 Vibrant Securities Pvt. Ltd.

Systematix Shares And Stocks M/S. Lila Bros.

Kashinath R Pednekar Huf 160 13:10:06 5.5 162.9 10000 44.25 55000 Systematix Shares & Stocks Vibrant Securities Pvt. Ltd.

Kashinath R Pednekar Huf M/S. Lila Bros.

Total 20000 88.5 72000 From the above table, it may be observed that the broker - Vibrant has dealt on behalf of its clients M/s. Lila Bros. The broker has entered into a buy transaction for 10000 options @Rs. 15 for his client at 12: 24: 20 hrs. The selling broker is M/s Systematix who is selling for client Kashinath Pednekar-HUF. Thereafter at 13:10:06 hrs, the transactions are reversed with the same counterparty broker /client for the same quantity but for a price of Rs 5.5. The close out difference is Rs 115000 (Rs 17 less Rs 5.5 times 10000 # of options).

It is also pertinent to note that there was no change in the price of underlying when both the transactions were undertaken and it remained at Rs 162.9-163.3. It was also seen that these transactions constituted 88.5% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period are summarised below Summary of transactions of Broker Vibrant Securities Ltd.

Trade Date Symbol Expiry Date Option Type Trade Qty %to Market Gross Close out diff 1-Feb-07 GESHIP 2/22/2007 CA 90,000 50.00 90,000 7-Feb-07 GESHIP 2/22/2007 CA 24,000 50.00 74,400 12-Feb-07 GESHIP 2/22/2007 CA 38,000 50.00 138,000 12-Feb-07 HCC 2/22/2007 CA 16,800 50.00 44,100 7-Feb-07 GDL 2/22/2007 CA 32,000 50.00 144,000 8-Feb-07 MATRIXLABS 2/22/2007 CA 15,000 28.56 37,500 19-Feb-07 GDL 2/22/2007 CA 14,000 50.00 52,500 20-Feb-07 CENTURYTEX 2/22/2007 CA 15,300 47.34 206,550 20-Feb-07 GESHIP 2/22/2007 CA 66,000 50.00 66,000 28-Feb-07 HCC 3/29/2007 CA 50,400 31.02 277,200 21-Feb-07 GESHIP 2/22/2007 CA 43,200 36.40 283,500 27-Feb-07 GESHIP 3/29/2007 CA 14,400 50.00 75,600 1-Mar-07 GDL 3/29/2007 CA 20,000 88.50 115,000 1-Mar-07 HCC 3/29/2007 CA 28,000 47.62 129,500 2-Mar-07 GESHIP 3/29/2007 CA 20,000 100.00 120,000 5-Mar-07 GDL 3/29/2007 CA 18,000 500 94,500 5-Mar-07 MATRIXLABS 3/29/2007 CA 10,000 ,000 65,000 6-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 110,000 6-Mar-07 BATAINDIA 3/29/2007 CA 42,000 50.00 189,000 7-Mar-07 GESHIP 3/29/2007 CA 24,000 50.00 144,000 7-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 85,000 7-Mar-07 NTPC 3/29/2007 CA 26,000 50.00 123,500 8-Mar-07 HCC 3/29/2007 CA 16,800 50.00 54,600 8-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 100.00 122,500 9-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 130,000 9-Mar-07 GUJAMBCEM 3/29/2007 CA 24,744 33.34 86,604 12-Mar-07 MATRIXLABS 3/29/2007 CA 30,000 46.16 187,500 16-Mar-07 RANBAXY 3/29/2007 CA 32,000 46.52 A32,000 21-Mar-07 NIFTY 3/29/2007 PE 00,000 40.82 1,600,000 21-Mar-07 NIFTY 3/29/2007 PE 9,500 49.74 213,750 21-Mar-07 NIFTY 4/26/2007 CE 20,000 49.02 564,000 21-Mar-07 HCC 3/29/2007 CA 14,000 50.00 23,100 22-Mar-07 GTL 3/29/2007 CA 12,000 50.00 39,000 22-Mar-07 NIFTY 3/29/2007 PE 23,400 50.00 1,041,300 30-Mar-07 NIFTY 4/26/2007 CE 17,900 49.58 355,763 13-Mar-07 SESAGOA 5/31/2007 FF 6,000 ,000 465,000 22-Mar-07 NIFTY 4/26/2007 PE 21,000 35.84 892,500 22-Mar-07 NIFTY 3/29/2007 PE 23,000 38.79 1,437,500 22-Mar-07 NIFTY 3/29/2007 PE 23,400 50.00 1,041,300 23-Mar-07 NIFTY 3/29/2007 PE 23,200 30.05 1,542,800 23-Mar-07 NIFTY 4/26/2007 PE 23,000 41.07 828,000 23-Mar-07 NIFTY 4/26/2007 PE 23,200 50.00 835,200 23-Mar-07 NIFTY 3/29/2007 PE 67,000 ,000 567,000 23-Mar-07 NIFTY 3/29/2007 PE 21,400 31.06 556,400 30-Mar-07 NIFTY 4/26/2007 CE 23,800 46.21 345,100 15,865,767 It is seen from the above that the broker has dealt in 14 stock option and 2 stock futures contract during the months of February and March 2007. Further, brokers' transactions comprised a significant percentage of exchange volume in that contract on that day.

Summary of transactions of Broker - Systematic Corporate Services Ltd.

Trade Date Symbol Expiry Date Option Type Trade Qty %to Market Gross Close out diff 1-Feb-07 GESHIP 2/22/2007 CA 90,000 50.00 90,000 7-Feb-07 GESHIP 2/22/2007 CA 24,000 50.00 74,400 12-Feb-07 GESHIP 2/22/2007 CA 38,000 50.00 138,000 12-Feb-07 HCC 2/22/2007 CA 16,800 50.00 44,100 7-Feb-07 GDL 2/22/2007 CA 32,000 50.00 144,000 8-Feb-07 MATRIXLABS 2/22/2007 CA 15,000 28.56 37,500 19-Feb-07 GDL 2/22/2007 CA 14,000 50.00 52,500 20-Feb-07 CENTURYTEX 2/22/2007 CA 15,300 47.34 206,550 20-Feb-07 GESHIP 2/22/2007 CA 66,000 50.00 66,000 28-Feb-07 HCC 3/29/2007 CA 50,400 31.02 277,200 21-Feb-07 GESHIP 2/22/2007 CA 43,200 36.40 283,500 27-Feb-07 GESHIP 3/29/2007 CA 14,400 50.00 75,600 1-Mar-07 GDL 3/29/2007 CA 20,000 88.50 115,000 1-Mar-07 HCC 3/29/2007 CA 28,000 47.62 129,500 2-Mar-07 GESHIP 3/29/2007 CA 60,000 100.00 60,000 5-Mar-07 GDL 3/29/2007 CA 18,000 500 94,500 5-Mar-07 MATRIXLABS 3/29/2007 CA 10,000 ,000 65,000 6-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 110,000 6-Mar-07 BATAINDIA 3/29/2007 CA 42,000 50.00 189,000 7-Mar-07 CHAMBLFERT 3/29/2007 CA 41,400 50.00 22,770 7-Mar-07 GESHIP 3/29/2007 CA 24,000 50.00 144,000 7-Mar-07 INDUSINDBK 3/29/2007 PA 23,100 50.00 25,988 7-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 85,000 7-Mar-07 NTPC 3/29/2007 CA 26,000 50.00 123,500 8-Mar-07 ALBK 3/29/2007 PA 24,500 50.00 14,088 8-Mar-07 ASHOKLEY 3/29/2007 CA 28,650 50.00 60,881 8-Mar-07 ESCORTS 3/29/2007 CA 24,000 45.46 60,000 8-Mar-07 IDFC 3/29/2007 CA 29,500 50.00 88,500 8-Mar-07 NEYVELILIG 3/29/2007 CA 23,600 50.00 25,370 8-Mar-07 MATRIXLABS 3/29/2007 CA 10,000 50.00 61,250 8-Mar-07 INDUSINDBK 3/29/2007 CA 50.0050 50.00 50,050 8-Mar-07 MATRIXLABS 3/29/2007 CA 10,000 50.00 61,250 9-Mar-07 MATRIXLABS 3/29/2007 CA 20,000 50.00 130,000 9-Mar-07 GUJAMBCEM 3/29/2007 CA 24,744 33.34 86,604 12-Mar-07 MATRIXLABS 3/29/2007 CA 30,000 46.16 187,500 13-Mar-07 CHAMBLFERT 3/29/2007 CA 41,400 50.00 18,630 13-Mar-07 IFCI 3/29/2007 CA 47,250 33.34 47,250 16-Mar-07 RANBAXY 3/29/2007 CA 32,000 46.52 A32,000 19-Mar-07 VIJAYABANK 3/29/2007 CA 41,400 50.00 57,960 26-Mar-07 NAGARFERT 3/29/2007 CA 56,000 50.00 58,800 13-Mar-07 SESAGOA 5/31/2007 FF 6,000 ,000 465,000 4,398,741 It is seen from the above table that the broker has transacted in 1 stock futures' contracts and 21 stock options during the period January to March 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (more than 50%) of market gross quantity.

2.11.3 Angel Capital And Debt Market Limited and Steel City Securities Ltd For broker - Angel, the total close out difference is Rs. 33.6 lakhs done during the month of March 2007 across 56 reversals done. Broker - Steel City Securities Ltd. has undertaken a total of 42 reversals across the period resulting in an aggregate close out difference of Rs 25.71 lakhs.

Illustrative Transactions by Angel and Steel City in HPCL call options (39171HINDPETRO39198CA240) executed on 30/3/07 for expiry on 26/4/07 - COD Rs 139100 Trade Time (hh:mm:ss) Trade Price Rs Cash Seg Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy Broker Selling brokers Buy Client Name Sell Client 11:20:58 24.9

248. 8 13000 25 323,700 Angel Capital and Debt Market Limited Steel City Securities Ltd.

Subham Developers Hari Prasad Rathi 14:40:39 14.2

245. 8 13000 25 184,600 Steel City Securities Ltd.

Angel Capital and Debt Market Limited Hari Prasad Rathi Subham Developers Total 26000 50 508,300 From the above table it may be observed that the broker - Angel has dealt on behalf of its clients Subham developers. The broker has entered into a buy transaction for 13000 options @Rs. 24.9 for his client at 11:20:58 hrs. The selling broker is Steel city Securities ltd who is selling for client Hari Prasad Rathi. Thereafter at 14:40:39 hrs, the transactions are reversed with the same counterparty broker /client for the same quantity but for a price of Rs 14.2. The close out difference is Rs 139100 (Rs 24.9 less Rs 14.2 times 13000 # of options).

It is also pertinent to note that there was no change in the price of underlying when both the transactions were undertaken and it remained at Rs 245.8-248.8. It was also seen that these transactions constituted 50% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period and are summarised below Summary of transactions by Angel Stock Broking Trade Date Underlying Expiry Date Option Type Trade Quantity %to Market Gross COD 6-Mar-07 BONGAIREFN 3/29/2007 CA 45000 50.00 110250 7-Mar-07 HCC 3/29/2007 CA 28000 50.00 68600 9-Mar-07 NDTV 3/29/2007 CA 6600 85.74 14410 16-Mar-07 IDFC 3/29/2007 CA 5900 40.00 29648 16-Mar-07 BONGAIREFN 3/29/2007 CA 050.00 50.00 66150 19-Mar-07 ANDHRABANK 3/29/2007 PA 46000 50.00 57500 19-Mar-07 BONGAIREFN 3/29/2007 PA 45000 50.00 43875 19-Mar-07 CANBK 3/29/2007 CA 320 50.00 86400 19-Mar-07 UNIONBANK 3/29/2007 PA 42000 50.00 49350 20-Mar-07 VIJAYABANK 3/29/2007 PA 69000 50.00 51750 20-Mar-07 NAGARFERT 5/31/2007 CA 0.0020 50.00 205100 20-Mar-07 KTKBANK 3/29/2007 CA 75000 50.00 75000 20-Mar-07 CHAMBLFERT 3/29/2007 PA 69000 50.00 51750 20-Mar-07 ALOKTEXT 3/29/2007 PA 67000 50.00 65325 21-Mar-07 TVSMOTOR 3/29/2007 CA 5900 50.00 73750 21-Mar-07 ORCHIDCHEM 3/29/2007 PA 21000 45.46 53550 21-Mar-07 NAGARCONST 3/29/2007 PA 40000 50.00 40000 21-Mar-07 MAHSEAMLES 3/29/2007 CA 24000 50.00 77400 21-Mar-07 IOC 3/29/2007 CA 0.00 50.00 44400 23-Mar-07 GRASIM 3/29/2007 CA 1750 50.00 26250 23-Mar-07 DIVISLAB 3/29/2007 CA 28000 50.00 28000 26-Mar-07 SRF 3/29/2007 CA 300 50.00 46500 26-Mar-07 NAGARCONST 3/29/2007 CA 48000 50.00 48000 26-Mar-07 MATRIXLABS 3/29/2007 CA 25000 50.00 51250 26-Mar-07 INDIANB 3/29/2007 CA 44000 50.00 45100 26-Mar-07 GRASIM 3/29/2007 CA 3500 90.92 86500 26-Mar-07 DIVISLAB 3/29/2007 CA 1000 50.00 55000 30-Mar-07 PUNJLLOYD 4/26/2007 CA 30000 50.00 91500 30-Mar-07 ORCHIDCHEM 4/26/2007 CA 4200 100.00 42000 30-Mar-07 NAGARFERT 5/31/2007 CA 28000 50.00 110250 30-Mar-07 HINDPETRO 4/26/2007 CA 260 50.00 68600 30-Mar-07 CORPBANK 4/26/2007 CA 12000 85.74 14410 30-Mar-07 CAIRN 4/26/2007 CA 12500 40.00 29648 30-Mar-07 BANKINDIA 4/26/2007 CA 38000 50.00 66150 28-Mar-07 BPCL 3/29/2007 CA 22000 50.00 57500 28-Mar-07 CORPBANK 3/29/2007 CA 24000 50.00 43875 28-Mar-07 CENTURYTEX 3/29/2007 CA 850 50.00 86400 28-Mar-07 JPHYDRO 4/26/2007 CA 25000 50.00 49350 28-Mar-07 IFCI 3/29/2007 CA 15750 50.00 51750 28-Mar-07 PRAJIND 3/29/2007 CA 11000 50.00 205100 29-Mar-07 PRAJIND 3/29/2007 CA 11000 50.00 75000 29-Mar-07 CORPBANK 3/29/2007 CA 12000 50.00 51750 19-Mar-07 BHARATFORG 5/31/2007 FF 2000 50.00 65325 26-Mar-07 CAIRN 5/31/2007 FF 50.00 50.00 73750 22-Mar-07 RENUKA 5/31/2007 FF 4000 45.46 53550 15-Mar-07 ORIENTBANK 5/31/2007 FF 9600 50.00 40000 20-Mar-07 GDL 5/31/2007 FF 4000 50.00 77400 15-Mar-07 BANKBARODA 3/29/2007 CA 28000 50.00 44400 30-Mar-07 BPCL 4/26/2007 CA 050.00 50.00 26250 23-Mar-07 CIPLA 3/29/2007 CA 28000 50.00 28000 15-Mar-07 NDTV 3/29/2007 CA 220 50.00 46500 15-Mar-07 SYNDIBANK 3/29/2007 CA 0.00480 50.00 48000 3,360,257.50 It is seen from the above that the broker has transacted in 43 stock options (both call as well as put options) during the period. Further, broker's transactions usually comprise significant percentage (more than 90%) of the day's traded volume in that segment.

Summary of transactions by Steel City Securities Ltd.

Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity %to Market Gross CLOSE OUT DIFFERENCE 1-Mar-07 PRAJIND 3/29/2007 CA /200 50.00 25300 1-Mar-07 PRAJIND 3/29/2007 CA /200 50.00 25300 2-Mar-07 UNIONBANK 3/29/2007 CA 16800 50.00 116760 6-Mar-07 BONGAIREFN 3/29/2007 CA 45000 50.00 110250 7-Mar-07 HCC 3/29/2007 CA 28000 50.00 68600 16-Mar-07 BONGAIREFN 3/29/2007 CA 050.00 50.00 66150 19-Mar-07 ANDHRABANK 3/29/2007 PA 46000 50.00 57500 19-Mar-07 BONGAIREFN 3/29/2007 PA 45000 50.00 43875 19-Mar-07 CANBK 3/29/2007 CA 320 50.00 86400 19-Mar-07 UNIONBANK 3/29/2007 PA 42000 50.00 49350 20-Mar-07 VIJAYABANK 3/29/2007 PA 69000 50.00 51750 20-Mar-07 KTKBANK 3/29/2007 CA 75000 50.00 75000 20-Mar-07 CHAMBLFERT 3/29/2007 PA 69000 50.00 51750 20-Mar-07 ALOKTEXT 3/29/2007 PA 67000 50.00 65325 21-Mar-07 ORCHIDCHEM 3/29/2007 PA 21000 45.46 53550 21-Mar-07 NAGARCONST 3/29/2007 PA 40000 50.00 40000 21-Mar-07 MAHSEAMLES 3/29/2007 CA 24000 50.00 77400 23-Mar-07 GRASIM 3/29/2007 CA 1750 50.00 26250 23-Mar-07 DIVISLAB 3/29/2007 CA 28000 50.00 28000 26-Mar-07 SRF 3/29/2007 CA 300 50.00 46500 26-Mar-07 NAGARCONST 3/29/2007 CA 48000 50.00 48000 26-Mar-07 MATRIXLABS 3/29/2007 CA 25000 50.00 51250 26-Mar-07 INDIANB 3/29/2007 CA 44000 50.00 45100 26-Mar-07 GRASIM 3/29/2007 CA 3500 90.92 54250 26-Mar-07 DIVISLAB 3/29/2007 CA 1000 50.00 55000 30-Mar-07 PUNJLLOYD 4/26/2007 CA 30000 50.00 91500 30-Mar-07 HINDPETRO 4/26/2007 CA 260 50.00 139100 30-Mar-07 CORPBANK 4/26/2007 CA 12000 31.26 36000 30-Mar-07 CAIRN 4/26/2007 CA 12500 50.00 50000 30-Mar-07 BANKINDIA 4/26/2007 CA 38000 50.00 112100 28-Mar-07 BPCL 3/29/2007 CA 22000 50.00 85800 28-Mar-07 CORPBANK 3/29/2007 CA 24000 41.68 67200 28-Mar-07 PRAJIND 3/29/2007 CA 11000 50.00 55550 29-Mar-07 PRAJIND 3/29/2007 CA 11000 50.00 31900 29-Mar-07 CORPBANK 3/29/2007 CA 12000 50.00 30000 15-Mar-07 BANKBARODA 3/29/2007 CA 28000 35.71 70000 30-Mar-07 BPCL 4/26/2007 CA 220 41.67 118800 23-Mar-07 CIPLA 3/29/2007 CA 25000 25.64 33750 15-Mar-07 NDTV 3/29/2007 CA 32000 29.41 132000 15-Mar-07 SYNDIBANK 3/29/2007 CA 76000 43.48 66500 2,538,810 It is seen from the above that the broker has transacted in 29 stock options (both call as well as put options) during the period. Further, broker's transactions usually comprised significant percentage (around 50%) of the day's traded volume in that segment.

2.11.4 Pratibuti Vinihit Ltd. and PSJ Securities Broker -PSJ Securities Pvt. Ltd. has undertaken 16 reversals across the period resulting in an aggregate close out difference of Rs 45.35 lakhs. Broker -Pratibhuti Vinihit Ltd. has 22 undertaken 10 reversals across the period resulting in an aggregate close out difference of Rs 39.27 lakhs.

Illustrative Transactions by the brokers for Zee Telefilms Stock Futures (39167ZEEL39233FF0) executed on 26/3/07 due for expiry on 31/5/07 -COD Rs 448000 Trade Time (hh:mm:ss) Trade Price Rs Cash Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy broker Name Sell broker Name Buy Client Name Sell Client Name 11:41:54 220 238.25 14000 22.7 3 3080000 Psj Securities Pvt. Ltd.

Pratibhuti Vinihit Ltd.

Tungarli Tradeplace P Ltd Pratibhuti Vinihit Ltd 11:42:09 252 238.65 14000 22.7 3 3528000 Pratibhuti Vinihit Ltd.

Psj Securities Pvt. Ltd.

Pratibhuti Vinihit Ltd Tungarli Tradeplace P Ltd Total 28000 45.45 6608000 From the above table it may be observed that the buying broker - PSJ Securities has dealt on behalf of its clients M/s Tungarli Tradeplace Private Limited. The broker has entered into a buy transaction for 14000 stock futures @Rs. 220 for his client at 11:41:54 hrs. The selling broker is Pratibhuti Vinihit Ltd. who is selling on own account. Immediately after 15 seconds i.e. at 11:42:09 hrs, the transactions are reversed with the same counterparty broker /client for the same quantity but for a price of Rs 252 The close out difference is Rs 448000 (Rs 252 less Rs 220 times 14000 # of futures).

It is also pertinent to note that there was no change in the price of underlying when both the transactions undertaken and it remained at Rs 22.73. It was also observed that these transactions constitute 45.45% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period are summarised below Summary of transactions of Broker - Pratibhuti Vinihit Ltd.

Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity %to Market Gross CLOSE OUT DIFFEREN-CE 26-Mar-07 ZEEL 5/31/2007 FF 28,000 45.46 448,000 26-Mar-07 WOCKPHARMA 5/31/2007 FF 00,000 27.02 F24,000 23-Mar-07 WOCKPHARMA 5/31/2007 FF 12,000 33.34 150,000 26-Mar-07 STAR 5/31/2007 FF 34,000 31.26 697,000 23-Mar-07 MAHSEAMLES 5/31/2007 FF 24,000 34.48 780,000 23-Mar-07 CHENNPETRO 5/31/2007 FF 36000 27.03 486000 12-Mar-07 FEDERALBNK 4/26/2007 FF 30000 25.00 130000 28-Mar-07 JSWSTEEL 5/31/2007 FF 231000 45.45 231000 15-Mar-07 NICOLASPIR 4/26/2007 FF 20900 31.25 167200 23-Mar-07 ZEEL 5/31/2007 FF 238000 40.00 238000 3,927,200 It is seen from the above that the broker has transacted in 8 stock futures' contracts in the month of March 2007 all due for expiry on 31.5.07. It is also noted that gross traded quantity by the broker is usually a significant percentage (around 30%) of market gross quantity on that date.

Summary of transactions of Broker PSJ Securities Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity %to Market Gross CLOSE OUT DIFFEREN-CE 26-Mar-07 ZEEL 5/31/2007 FF 28000 45.46 448,000 26-Mar-07 WOCKPHARMA 5/31/2007 FF 2600,0 27.02 600,000 23-Mar-07 WOCKPHARMA 5/31/2007 FF 120 33.34 150,000 26-Mar-07 STAR 5/31/2007 FF 34000 31.26 697,000 28-Mar-07 MRPL 5/31/2007 FF 35600 28.58 22,250 23-Mar-07 MAHSEAMLES 5/31/2007 FF 24000 34.48 780,000 26-Mar-07 CIPLA 5/31/2007 FF 150,000 40.00 150,000 28-Mar-07 IOC 5/31/2007 FF 120 26.32 360,000 23-Mar-07 CHENNPETRO 5/31/2007 FF 36000 27.03 486000 12-Mar-07 FEDERALBNK 4/26/2007 FF 30000 25.00 130000 28-Mar-07 JSWSTEEL 5/31/2007 FF 231000 45.45 231000 15-Mar-07 NICOLASPIR 4/26/2007 FF 20900 31.25 167200 23-Mar-07 ZEEL 5/31/2007 FF 238000 40.00 238000 12-Feb-07 CHENNPETRO 3/29/2007 FF 9,000.00 66.66 54000 12-Feb-07 GUJALKALI 3/29/2007 FF 8,400.00 25.00 22680 45,36,130 It is seen from the above that the broker has transacted in 14 stock futures' contracts during the months of February and March 2007. Contracts were /are due for expiry towards the end of March, April and May 2007. It is also noted that gross traded quantity by the broker is usually a significant percentage (around 30%) of market gross quantity on that date.

2.11.5 Prashant J Patel Prashant Jayantilal Patel has undertaken 19 reversals across the period resulting in an aggregate close out difference of Rs 118.58 lakhs.

Illustrative Transactions by the broker in Bank of India Call options (39170BANKINDIA39170CA155) executed on 29/3/07 for expiry on 29/3/07-COD Rs 102600 Trade Time (hh:mm:ss) Trade Price Rs Cash Price Rs Trade Qty % to Mkt Gross Traded Value Rs Buy broker Name Sell broker Name Buy Client Name Sell Client Name 10:52:35 3 169.7 5,700 50 17,100 Prashant Jayantilal Patel Prashant Jayantilal Patel Nikunj Mehta Huf Nasdaq Securities 11:24:37 21 170.1 5,700 50 119,700 Prashant Jayantilal Patel Prashant Jayantilal Patel Nasdaq Securities Nikunj Mehta Huf Total 11,400 100 136,800 From the above table, it may be observed that the buying broker - P J Patel has dealt on behalf of its clients Nikunj Mehta Huf and Nasdaq Securities. The broker has entered into a buy transaction for 5700 stock options @Rs. 3 for his client -at 10:52:35hrs. The broker is appearing on both sides of the transaction. Thereafter, at 11:24: 37 hrs, broker is reversing the transactions for the same set of clients but for a price of Rs 21 The close out difference is Rs 102600 (Rs 21 less Rs 3 times 5700 # of options).

It is also pertinent to note that there was no change in the price of underlying when both the transactions were undertaken and it remained at Rs 169.7-170.1. It was also seen that these transactions constituted 100% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period are summarised below Trade Date Buy Symbol Buy Expiry Date Buy Option Type Trade Quantity %to Market Gross CLOSE OUT DIFFERENCE 20-Mar-07 IFCI 3/29/2007 CA 15,750 66.66 51,187 21-Mar-07 TTML 3/29/2007 CA 20,900 100 73,150 21-Mar-07 NIFTY 3/29/2007 PE 00,000 40.82 1,600,000 21-Mar-07 NIFTY 3/29/2007 PE 9,500 49.74 213,750 21-Mar-07 NIFTY 4/26/2007 CE 20,000 49.02 564,000 21-Mar-07 JSTAINLESS 3/29/2007 CA 160,000 31.5 800,000 22-Mar-07 NIFTY 3/29/2007 PE 23,400 50 1041300 30-Mar-07 NIFTY 4/26/2007 CE 17,900 49.58 355762 28-Mar-07 LICHSGFIN 3/29/2007 CA 10,200 42.86 21,675 28-Mar-07 POLARIS 3/29/2007 CA 8,400 37.5 30,870 29-Mar-07 BANKINDIA 3/29/2007 CA 11,400 100 102600 22-Mar-07 NIFTY 4/26/2007 PE 21000 35.84 892500 22-Mar-07 NIFTY 3/29/2007 PE 437500 38.79 1437500 23-Mar-07 NIFTY 3/29/2007 PE 2800 30.05 1542800 23-Mar-07 NIFTY 4/26/2007 PE 28000 41.07 828000 23-Mar-07 NIFTY 4/26/2007 PE 835200 50.00 835200 23-Mar-07 NIFTY 3/29/2007 PE 21000 30.00 567000 23-Mar-07 NIFTY 3/29/2007 PE 21400 31.06 556400 30-Mar-07 NIFTY 4/26/2007 CE 23800 46.21 345100 1,18,58,795 It is seen from the above that the broker has transacted in 8 options contracts during the month of March 2007. Further, the transactions usually comprised a significant percentage of the market volume (more than 50%) on that date.

2.11.6 Indiabulls Securities Ltd Broker -Indiabulls Securities Ltd has undertaken 23 reversals across the period resulting in an aggregate close out difference of Rs 35.43 lakhs Illustrative Transactions for broker Indiabulls Securities in Bank Nifty futures executed on 29/1/07 due for expiry on 26/4/07-COD Rs 600050 Trade Time (hh:mm:ss) Trade Price Rs Cash Price Rs Trade Qty %to Mkt Gross Traded Value Rs Buy broker Name Sell broker Name Buy Client Name Sell Client Name 10:40:04 6873.60 1090.00 500 25 3436800 Indiabulls Securities Ltd.

Lohia Securities Limited Sree Rama Chandra Lohia Securities Ltd-Pro 10:40:21 5673.50 1115.75 500 25 2836750.

Lohia Securities Limited Indiabulls Securities Ltd.

Lohia Securities Ltd-Pro Sree Rama Chandra 1000 50 6273550 From the above table it may be observed that the buying Indiabulls Securities has dealt on behalf of its clients Sree Ram Chandra and entered into a buy transaction for 500 Bank Nifty Futures @Rs. 6873.6 for his client -at 10:40:04 hrs. The selling broker is Lohia Securities trading on self account. Immediately after 17 seconds, i.e. at 10:40: 21 hrs, brokers are reversing the transactions for the same set of clients but for a price of Rs 5673.50. The close out difference is Rs 600050 (Rs 6873.60 less Rs 5673.50 times 500 # of futures).

It is also pertinent to note that there was no significant change in the price of underlying when both the transactions undertaken and it remained at levels Rs 1090-1115.75. It was also noted that these transactions constitute 50% of the market volume in that particular contract at the exchange for the day.

Similar other transactions carried out by the brokers for other clients during the period are summarised below Trade Date Symbol Expiry Date Option Type Trade Qty % to Market Gross Close out diff 29-Jan-07 BANKNIFTY 26-Apr-07 FF 1000 50.00 600050 23-Jan-07 PNB 25-Jan-07 CA 2400 33.34 12000 22-Jan-07 JETAIRWAYS 29-Mar-07 FF 800 50.00 79760 26-Feb-07 LITL 5/31/2007 FF 1,700 100 27200 6-Feb-07 ULTRACEMCO 4/26/2007 FF 3,200 100.00 160000 7-Feb-07 VIJAYABANK 4/26/2007 FF 13,800 50.00 31050 16-Mar-07 IDBI 4/26/2007 CA 4800 50.00 21600 21-Mar-07 AMTEKAUTO 5/31/2007 FF 6000 71.42 180000 19-Mar-07 BAJAJAUTO 5/31/2007 FF 02700 70000 270000 21-Mar-07 BAJAJAUTO 5/31/2007 FF 100 80.00 210000 19-Mar-07 BHARATFORG 5/31/2007 FF 20 50.00 48000 16-Mar-07 VSNL 5/31/2007 FF 207900 50.00 207900 22-Mar-07 ULTRACEMCO 5/31/2007 FF 6000 32.96 510000 19-Mar-07 ULTRACEMCO 5/31/2007 FF 0.00 100.00 392000 26-Mar-07 TATAPOWER 5/31/2007 FF 800 50.00 28000 20-Mar-07 RENUKA 5/31/2007 FF 100.0 100.00 48450 30-Mar-07 RENUKA 6/28/2007 FF 4000 100.00 72000 19-Mar-07 PNB 5/31/2007 FF 100.0 100.00 48360 23-Mar-07 JPASSOCIAT 5/31/2007 FF 4200 50.00 178500 19-Mar-07 GESHIP 5/31/2007 FF 2400 100.00 39780 26-Mar-07 COLGATE 5/31/2007 FF 0.00 50.00 73500 26-Mar-07 IOC 5/31/2007 FF 2400 33.34 120000 6-Mar-07 CHENNPETRO 4/26/2007 FF 27000 50.00 186300 35,44,450 It is seen from the above that the broker has transacted in 23 futures /options contracts during the month of March 2007. Further, the transactions usually comprised a significant percentage of the market volume (more than 50%) 2.12 The above transactions are only illustrative in nature and there are a series of such similar transactions which were undertaken by the 20 brokers mentioned earlier during the examination period for several clients. As with the illustrative transactions, the other transactions also comprised a major portion of the market volume in that option contract, were reversed within a short time period of each other. In many cases, synchronisation in order entry was also not needed since the contracts were in illiquid options and hence buyer could get desired seller and vice versa and there was no chance of the orders being matched with any other third party. Further, the reversals took place at significant variation (there was huge price difference in the buy order and the subsequent close/out -sale order) to each other with little or no price change in the underlying.

2.13 Client wise analysis 2.13.1 Based on the information provided by the exchange, a client level analysis was carried out. For the purpose of preliminary examination, those clients whose closeout difference was Rs 30 Lacs or more during the period were short listed. The details of shortlisted client are given as under:

S. No Client Name Client Address No Of Trade COD (Rs. Lac) PAN No.

1.

Kasam Holding Pvt. Ltd.

60, Swastik Plaza, 2nd Floor, V.L. Mehta Road, Next To Kala Niketan, Juhu, Vileparle (W), Mumbai.

136.34 AACCK3413C

2. Rakhi Trading Pvt Ltd 61/62, 4th Floor, 109, Gaya Bldg, Y M Road, Masjid Bunder (W), Mumbai 14 115.79 AACCR6372B

3. Manu Vyapar Pvt. Ltd.

21, Hemant Basu Sarani Centre Point Kolkata 12 97.62 AABCM7561Q

4. Amit Business Ltd 113 NS Road 4th Floor Kolkata 9 71.91 AACCA6091Q

5. Shah Chirag Kirtikumar 309, Silver Point, New Station Road, Bhuj-Katch 8 67.28 ANXPS3298N

6. Suresh Bharrat C-2/7, Janak Puri, New Delhi 42 53.05 AJFPB5726L

7. Raj Corporation B/54,, Pariseema Complex, C.G Road Ahmedabad 6 40.60 ADAPK7045A

8. Tungarli Tradeplace Private Limited Bldg No.32, 1st Floor, Rajabahadur Mansion, Apollo Street, Fort, 14 39.27 AACCT4504F

9. TLB Securities Pvt. Ltd.

72-A, Mittal Tower 210, Nariman Point, Mumbai, maharashtra 10 38.69 AACCT1355L

10. Pratibhuti Vinihit Ltd 15-A, 3rd Floor, 28 Rajajbahadur Mansion, Mumbai Samachar Marg, Fort, Mumbai 8 30.96 AAACP6298A

11. Amar Mukeshbhai Shah Opp Cloth Market, Tanki Chowk, Surendranagar.

30.95 AQEPS9060L The transactions of the short listed clients are detailed herein under:

a) Transactions of client Kasam Holding P Ltd. (KHPL) Trade Date Symbol ED OT GTQ %to MG COD TM CTM CCN 1-Feb-07 GESHIP 2/22/2007 CA 59000 25 90000 VSPL SSSIL Archjit Proj Mgm Consult P. Ltd 7-Feb-07 GDL 2/22/2007 CA 8000 12.5 36000 VSPL SSSIL Daksha H Parekh 7-Feb-07 GDL 2/22/2007 CA 8000 12.5 36000 VSPL SSSIL Anju Khandelwal 8-Feb-07 Matrixlab 2/22/2007 CA 7500 14.28 18750 VSPL SSSIL Anju Khandelwal 8-Feb-07 Matrixlab 2/22/2007 CA 7500 14.28 18750 VSPL SSSIL G.D. Khandelwal 19-Feb-07 GDL 2/22/2007 CA 14000 50 52500 VSPL SSSIL Pinky Vijay Shah 20-Feb-07 Centurytex 2/22/2007 CA 5100 15.78 68850 VSPL SSSIL Bharti V Parekh 20-Feb-07 Centurytex 2/22/2007 CA 5100 15.78 68850 VSPL SSSIL Jinal Rajiv Parekh 20-Feb-07 GESHIP 2/22/2007 CA 12000 25 33000 VSPL SSSIL Popatlal J Shah 20-Feb-07 GESHIP 2/22/2007 CA 12000 25 33000 VSPL SSSIL Varsha P Shah 28-Feb-07 HCC 3/29/2007 CA 16800 10.34 92400 VSPL SSSIL Ashok P Shah 28-Feb-07 HCC 3/29/2007 CA 16800 10.34 92400 VSPL SSSIL Bhavana A Shah 28-Feb-07 HCC 3/29/2007 CA 16800 10.34 92400 VSPL SSSIL Neena G Shah 21-Feb-07 GESHIP 2/22/2007 CA 10800 9.1 56700 VSPL SSSIL Bharti V Parekh 21-Feb-07 GESHIP 2/22/2007 CA 10800 9.1 56700 VSPL SSSIL Varsha P Shah 21-Feb-07 GESHIP 2/22/2007 CA 10800 9.1 56700 VSPL SSSIL Popatlal J Shah 21-Feb-07 GESHIP 2/22/2007 CA 3600 3.04 18900 VSPL SSSIL Pinky Vijay Shah 21-Feb-07 GESHIP 2/22/2007 CA 7200 6.06 37800 VSPL SSSIL Jinal Rajiv Parekh 27-Feb-07 GESHIP 3/29/2007 CA 14400 50 75600 VSPL SSSIL Devki G Kewani 2-Mar-07 GESHIP 3/29/2007 CA 12000 50 60000 VSPL SSSIL Devang R Suchde 6-Mar-07 Matrixlab 3/29/2007 CA 200 50 110000 VSPL SSSIL Ashish N Parikh 7-Mar-07 NTPC 3/29/2007 CA 13000 25 61750 VSPL SSSIL Himanshu V Parikh Huf 9-Mar-07 Matrixlab 3/29/2007 CA 200 50 130000 VSPL SSSIL Ashish N Parikh 16-Mar-07 RANBAXY 3/29/2007 CA 72000 23.26 272000 VSPL SSSIL Metro Consultancy Manish Arvind Parikh 21-Mar-07 NIFTY 3/29/2007 PE 00000 40.82 1600000 VSPL PJP RTPL 21-Mar-07 NIFTY 3/29/2007 PE 9500 49.74 213750 VSPL PJP RTPL 22-Mar-07 NIFTY 3/29/2007 PE 23400 50 1041300 VSPL PJP RTPL 13-Mar-07 SESAGOA 5/31/2007 FF 6000 50 465000 VSPL SSSIL Shanti Investments Corporation Vikas S Shah 23-Mar-07 NIFTY 3/29/2007 PE 2800 30.05 1542800 VSPL PJP RTPL 7-Mar-07 Matrixlab 3/29/2007 CA 20000 50 85000 VSPL SSSIL Ashish N Parikh 9-Mar-07 GUJ AMBCEM 3/29/2007 CA 24744 33.34 86604 VSPL SSSIL Ashish N Parikh 5-Mar-07 GDL 3/29/2007 CA 18000 50 94500 VSPL SSSIL Devang R Suchde 7-Feb-07 GDL 2/22/2007 CA 8000 12.5 36000 VSPL SSSIL G.D. Khandelwal 20-Feb-07 Centurytex 2/22/2007 CA 5100 15.78 68850 VSPL SSSIL Harendra J Parekh 5-Mar-07 Matrixlab 3/29/2007 CA 10000 50 65000 VSPL SSSIL Kashinath R Pednekar Huf 22-Mar-07 GTL 3/29/2007 CA 12000 50 39000 VSPL SSSIL Kruti Chirag Shah 12-Mar-07 Matrixlab 3/29/2007 CA 300 46.16 187500 VSPL SSSIL Metro Consultancy Manish A Parikh 21-Mar-07 NIFTY 4/26/2007 CE 64000 49.02 564000 VSPL PJP RTPL 30-Mar-07 NIFTY 4/26/2007 CE 17900 49.58 355763 VSPL PJP RTPL 22-Mar-07 NIFTY 4/26/2007 PE 21000 35.84 892500 VSPL PJP RTPL 22-Mar-07 NIFTY 3/29/2007 PE 437500 38.79 1437500 VSPL PJP RTPL 23-Mar-07 NIFTY 4/26/2007 PE 28000 41.07 828000 VSPL PJP RTPL 23-Mar-07 NIFTY 4/26/2007 PE 835200 50 835200 VSPL PJP RTPL 23-Mar-07 NIFTY 3/29/2007 PE 21000 30 567000 VSPL PJP RTPL 23-Mar-07 NIFTY 3/29/2007 PE 21400

31.06 556400 VSPL PJP RTPL 30-Mar-07 NIFTY 4/26/2007 CE 23800 46.21 345100 VSPL PJP RTPL 21-Mar-07 HCC 3/29/2007 CA 14000 50 23100 VSPL Kaynet Finance Limited Shah Paresh A 7-Feb-07 GDL 2/22/2007 CA 8000 12.5 36000 VSPL SSSIL Vijay J Parekh 13634917 Legend: ED - Expiry Date; OT-Option Type; GTQ - Gross Traded Quantity; %MG -% to Market Gross; TM -Trading broker; CTM-Counter Trading broker; CCN -Counter party Client SSIL-Systematix Shares And Stocks (India) Limited; KHPL-Kasam Holding Pvt. Ltd ; VSPL-Vibrant Securities P Ltd; PJP-Prashant J Patel;

It is seen from the above table that client Kasam Holding Pvt. Ltd has traded in a total of 51 contracts during the months of February & March, 2007. The total close out difference for the above transactions was Rs.136.34 (Negative). It is also noted that all transactions of KHPL resulted into loss and in total it has made a loss of Rs.136.34 lacs. The client has dealt through the broker Vibrant Securities Pvt Ltd.

b) Transactions of client - Rakhi Trading P Ltd. (RTPL) Trade Date Symbol ED OT GTQ %to MG COD TM CTM CCN 21-Mar-07 NIFTY 4/26/2007 CE 256400 49.02 564000 PJP VSL KHPL 21-Mar-07 NIFTY 3/29/2007 PE 60000 40.82 1600000 PJP VSL KHPL 21-Mar-07 NIFTY 3/29/2007 PE 9500 49.74 213750 PJP VSL KHPL 21-Mar-07 J SL 3/29/2007 CA 160000 31.50 800000 PJP SSPL SSPL 22-Mar-07 NIFTY 4/26/2007 PE 21000 35.84 892500 PJP VSL KHPL 22-Mar-07 NIFTY 3/29/2007 PE 23000 38.79 1437500 PJP VSL KHPL 22-Mar-07 NIFTY 3/29/2007 PE 23400 50.00 1041300 PJP VSL KHPL 23-Mar-07 NIFTY 4/26/2007 PE 2800 41.07 828000 PJP VSL KHPL 23-Mar-07 NIFTY 4/26/2007 PE 835200 50.00 835200 PJP VSL KHPL 23-Mar-07 NIFTY 3/29/2007 PE 21000 30.00 567000 PJP VSL KHPL 23-Mar-07 NIFTY 3/29/2007 PE 21400 31.06 556400 PJP VSL KHPL 23-Mar-07 NIFTY 3/29/2007 PE 2800 30.05 1542800 PJP VSL KHPL 30-Mar-07 NIFTY 4/26/2007 CE 17900 49.58 355762 PJP VSL KHPL 30-Mar-07 NIFTY 4/26/2007 CE 23800 46.21 345100 PJP VSL KHPL Total 11579312 Legend: PJP- Prashant Jayantilal Patel; VSL - Vibrant Securities Pvt. Ltd; SSPL- Spark Securities Pvt Ltd; JSL-Jindal Stainless Ltd.

It is seen from the above that Client Rakhi Trading Pvt Ltd has traded in month of March, 2007 in a total of 14 contracts. The Total COD is Rs 11579312.5 ((positive). It is further noted that all transactions of RTPL have resulted into profit and in total it has made a profit of Rs.115.79 lacs. The client has dealt through the broker Prashant Jayantilal Patel.

c) Transactions of client - Manu Vyapar P Ltd Trade Date Symbol ED Product Type GTQ %to MG COD TM CTM CCN 27-Feb-07 SRF 4/26/07 FF 150000 10 337500 ASBL MSBL ICP 27-Feb-07 SRF 4/26/07 FF 150000 10.00 270000 ASBL MSBL ICPL 27-Feb-07 SRF 4/26/07 FF 150000 10 1342500 MSBL ASBL YVPL 2-Mar-07 TRIVENI 4/26/07 FF 385000 48.54 587125 MSBL ASBL ABL 2-Mar-07 ALBK 4/26/07 FF 490000 24.94 967750 MSBL ASBL ABL 2-Mar-07 CHAM BL FERT 4/26/07 FF 276000 24.39 469200 MSBL ASBL ABL 2-Mar-07 GDL 4/26/07 FF 645000 45.05 645000 MSBL ASBL ABL 2-Mar-07 IOB 4/26/07 FF 236000 48.19 436600 MSBL ASBL ABL 2-Mar-07 KTK BANK 4/26/07 FF 250000 45.45 550000 MSBL ASBL ICPL.

2-Mar-07 MRPL 4/26/07 FF 534000 34.09 320400 MSBL ASBL ICPL.

2-Mar-07 NICOL ASPIR 4/26/07 FF 104500 50.00 1196525 MSBL ASBL ABL 2-Mar-07 CORP BANK 4/26/07 FF 240000 43.67 240000 MSBL ASBL ABL Total 9762600 Legend : MSBL-Manu Stock Broking (P) Ltd; ASBL-Ashika Stock Broking Limited ; MVPL- Manu Vyapar Pvt. Ltd.; ; ABL-Amit Business Ltd; YVPL -Yashman Vyapaar Pvt Ltd. ED- Expiry date.

It is seen from the above table that client Manu Vyapar Pvt. Ltd has traded in a total of 12 contracts during the months of February & March, 2007. The Total COD for the above transactions was Rs9762600 (positive). It is also noted that all transactions of Manu Vyapar have resulted into profit and in total it has made a profit of Rs.97.62 lacs. The client has dealt through the broker Manu Stock Broking (P) Ltd.

d) Transaction of Client Amit Business Ltd (ABL) Trade Date Symbol Expiry Date OT T Qty %to MG COD TM CTM CCN 2-Mar-07 CORPBANK 4/26/07 FF 240000 43.67 240000 MSB(P)L ASBL MVPL 23-Feb-07 GRASIM 3/29/07 CA 3500 8.20 64400 ASBL DSL.

ESVPL 23-Feb-07 GRASIM 3/29/07 CA 3500 8.20 59675 ASBL DSL.

ESVPL 23-Feb-07 GRASIM 3/29/07 CA 7000 16.40 125300 ASBL DSL.

ESVPL 2-Mar-07 TRIVENI 4/26/07 FF 385000 48.54 587,125 MSB(P)L ASBL MVPL 2-Mar-07 ALBK 4/26/07 FF 490000 24.94 967750 MSB(P)L ASBL MVPL 2-Mar-07 CHAMBLFERT 4/26/07 FF 276000 24.39 469200 MSB(P)L ASBL MVPL 2-Mar-07 GDL 4/26/07 FF 645000 45.05 645000 MSB(P)L ASBL MVPL 2-Mar-07 IOB 4/26/07 FF 236000 48.19 436600 MSB(P)L ASBL MVPL 2-Mar-07 NICOLASPIR 4/26/07 FF 104500 50 1196525 MSB(P)L ASBL MVPL 7,191,575 Legends: ASBL -Ashika stock broking limited; MSB(P)L -Manu stock broking (p) ltd; DSL -Destiny securities ltd; ESVPL -Exim scrips vanijay Pvt ltd; MVPL -Manu vyapar pvt. Ltd It is seen from the above table that client Amit Business Ltd has traded in a total of 8 contracts during the months of February and March 2007. The total COD for the above transactions was Rs. 7191575 (negative). It is further noted that these transactions have resulted into losses of Rs.71.19 Lacs for Amit Business. The client has dealt through the broker Ashika stock broking limited and Destiny securities ltd. It is also noted that the counterparty broker for these transactions were the same.

e) Transactions of client -Shah Chirag Kirtikumar (SCK) Trade Date Symbol ED PT Trade Qty %to MG COD TM CTM CCN 23-Jan-07 Suzlon 29-3-07 FF 12800 65.3 716800 KIFSL KIFSL Ashok K Sanghvi 23-Jan-07 UltraCemco 29-3-07 FF 103000 100.00 1030000 KIFSL KIFSL Jaykumar K Shah 31-Jan-07 AmtekAuto 29-3-07 FF 48000 98.76 624000 KIFSL KIFSL Amar M Shah 1-Feb-07 Auropharma 29-3-07 FF 28000 97.56 686000 KIFSL KIFSL Amar M Shah 1-Feb-07 Crompgreav 29-3-07 FF 54000 62.06 648000 KIFSL KIFSL Navkar Investment Consul 2-Feb-07 Bomdyeing 29-3-07 FF 6000 52.64 117000 KIFSL KIFSL Anil B Thacher 6-Feb-07 HTMT 29-3-07 FF 42000 41.92 1785000 KIFSL KIFSL Amar M Shah 7-Mar-07 CESC 26/4/07 FF 66000 42.86 1122000 KIFSL KIFSL Raj Corporation 6728800 It is seen from the above table that client Shah Chirag Kirtikumar has traded in a total of 8contracts during the months of January & February, 2007. The total COD for the above transactions was Rs.6728800 (negative). It is further noted that these transactions have resulted into losses of Rs.67.28 Lacs for Shah Chirag Kirtikumar. The client has dealt through the broker Khandwala Integrated Financial Services P Ltd

f) Transaction of Client Suresh Bharrat Trade Date Symbol Expiry Date OT T Qty %to MG COD TM CTM CCN 11-Jan-07 KTKBANK 25-1-07 PA 100290 100 29000 CPR CPR RA 11-Jan-07 KTKBANK 25-1-07 PA 5000 100 25000 CPR CPR RA 22-Jan-07 LT 29-3-07 FF 2000 38.46 101500 CPR CPR MG 22-Jan-07 IDBI 29-3-07 FF 38400 72.72 90240 CPR CPR RA 22-Jan-07 IFCI 29-3-07 FF 63000 50 47250 CPR CPR RA 23-Jan-07 SUZLON 29-3-07 FF 2800 14.28 116010 CPR CPR SS 23-Jan-07 TCS 29-3-07 FF 1500 66.66 17812 CPR CPR SS 24-Jan-07 Vijayabank 29-3-07 FF 27600 80.0 15180 CPR CPR MG 25-Jan-07 POLARIS 29-3-07 FF 22400 88.88 93520 CPR CPR Subhash Malik Huf 25-Jan-07 TVSMOTOR 29-3-07 FF 47200 59.20 29500 CPR CPR Subhash Malik Huf 25-Jan-07 IOB 29-3-07 FF 5900 83.34 85550 CPR CPR VK(Huf) 25-Jan-07 GMRINFRA 29-3-07 FF 2000 60.6 73500 CPR CPR VK(Huf) 25-Jan-07 ESSAROIL 29-3-07 FF 90400 15.54 194360 CPR CPR SS 25-Jan-07 INDIACEM 29-3-07 FF 23200 72.72 43500 CPR CPR VK(Huf) 29-Jan-07 SOBHA 29-3-07 FF 8400 50 117600 CPR CPR OPC 29-Jan-07 SOBHA 29-3-07 FF 8400 50 164010 CPR CPR OPC 31-Jan-07 Wockpharma 29-3-07 FF 12000 23.8 179400 CPR CPR VK 31-Jan-07 Mcdowell-N 29-3-07 FF 7000 31.82 87500 CPR CPR VK 31-Jan-07 Patni 29-3-07 FF 10400 25 115180 CPR CPR VK 1-Feb-07 Crompgreav 29-3-07 FF 18000 20.68 105300 CPR CPR MG 5-Feb-07 BEML 29-3-07 FF 10000 57.14 95000 CPR CPR VK 7-Feb-07 CORPBANK 29-3-07 FF 19200 25 115200 CPR CPR NU 7-Feb-07 CORPBANK 29-3-07 FF 19200 25 76800 CPR CPR SS 19-Feb-07 INDHOTEL 26-4-07 FF 28000 88.88 101500 CPR CPR MG 19-Feb-07 SUZLON 26-4-07 FF 4000 76.92 64000 CPR CPR MG 20-Feb-07 ACC 26-4-07 FF 7500 47.62 135000 CPR CPR Biram Wati 20-Feb-07 ACC 26-4-07 FF 7500 47.62 262500 CPR CPR VK 21-Feb-07 JINDALSTEL 26-4-07 FF 400 23.52 296000 CPR CPR Meenu Singhal 21-Feb-07 JINDALSTEL 26-4-07 FF 400 23.52 216000 CPR CPR VK(Huf) 21-Feb-07 JINDALSTEL 26-4-07 FF 400 23.52 230000 CPR CPR VK(Huf) 22-Feb-07 PUNJLLOYD 26-4-07 FF 69000 68.96 69000 CPR CPR JRM 21-Feb-07 BEML 26-4-07 FF 10000 95.24 310000 CPR CPR Gaurav Verma 23-Feb-07 Mcdowell-N 26-4-07 FF 5000 90.9 97500 CPR CPR JRM 26-Feb-07 Bomdyeing 26-4-07 FF 12000 28.78 216000 CPR CPR Mukund Singhal 26-Feb-07 Bomdyeing 26-4-07 FF 12000 28.78 198000 CPR CPR Niraj K Mittal (Huf) 5-Mar-07 Bomdyeing 26-4-07 FF 600 24.4 105000 CPR CPR JRM 6-Mar-07 ABAN 26-4-07 FF 600 28.3 234000 CPR CPR TM 6-Mar-07 ABAN 4/26/07 FF 600 28.3 303000 CPR CPR TM 6-Mar-07 Bomdyeing 26-4-07 FF 6000 24.7 126000 CPR CPR JRM 7-Mar-07 Auropharma 26-4-07 FF 7000 68.96 147000 CPR CPR Mam Chand Yadav 9-Mar-07 PUNJLLOYD 26-4-07 FF 600 71.42 177,000 CPR CPR VK(Huf) 5305412 Legend: CPR -CPR Capital Services Ltd ; RA -Ramesh Ahuja; VK -Vikas Ku3 Mittal; TM-Tina Mittal; OPC -Om Prakash Chawl ; SS -Sudarshan Ku3 Sachdeva; MG -Mahesh K Gupta; NU -Naveen Uppal & Sons Huf; MG -Mohit Goel ; Jagdish Rai Mittal (Huf)-JRM It is seen from the above table that client Suresh Bharrat has traded in a total of 27 contracts during the months of January, February and March 2007. The total COD for the above transactions was Rs.5305412 (negative). It is further noted that these transactions have resulted into losses of Rs.53.05 Lacs for Suresh Bhagat. The client has dealt through the broker CPR Capital Services Ltd and the counterparty broker for these transactions were the same.

g) Transactions of client - Raj Corporation Ltd.

Trade Date Symbol Expiry Date Pdt type Trade Qty % to MG COD BTM CTM CCN 7-Mar-07 CESC 4/26/07 FF 66000 42.86 1122000 KIFSL KIFSL SCK 8-Mar-07 CUMMINSIND 4/26/07 FF 57000 50.00 555750 KIFSL KIFSL VGS 9-Mar-07 FEDERALBNK 4/26/07 FF 52,000 47.62 468,000.00 KIFSL KIFSL MLM 9-Mar-07 PATNI 4/26/07 FF 45,500 77.78 728,000.00 KIFSL KIFSL MLM 9-Mar-07 AUROPHARMA 4/26/07 FF 28000 50.00 840000 KIFSL KIFSL MLM 14-Mar-07 NICOLASPIR 4/26/07 FF 41800 40.00 346940 KIFSL KIFSL HV SHAH TOTAL 4,060,690 Legend: KIFSL-Khandwala Integrated Financial Services P Ltd; RC -Raj Corporation; MLM - Mehul Lavji Mehta; VGS -Vaghjibhai Gagaldas Shah; SCK -Shah Chirag Kirtikumar It is seen from the above that client Raj Corporation Ltd has traded in months of March, 2007 in a total of 6 contracts. The total COD for the above transactions was Rs.4,060,690 (Positive). It is also noted that all transactions of Raj Corporation have resulted into profit and in total it has made a profit of Rs.40.60 lacs. The client has dealt through the broker Khandwala Integrated Financial Services P Ltd

c) Transactions of client - Tungarli Tradeplace P Ltd Trade Date Symbol ED OT GTQ %to MG COD TM CTM CCN 26-Mar-07 ZEEL 5/31/2007 FF 28000 45.46 448,000 PSJ PVL PVL 26-Mar-07 WOCKPHARMA 5/31/2007 FF 24000 27.02 600,000 PSJ PVL Damani Sec Ltd 23-Mar-07 WOCKPHARMA 5/31/2007 FF 12000 33.34 150,000 PSJ PVL PVL 26-Mar-07 STAR 5/31/2007 FF 34000 31.26 697,000 PSJ PVL PVL 23-Mar-07 MAHSEAMLES 5/31/2007 FF 24000 34.48 780,000 PSJ PVL PVL 23-Mar-07 CHENNPETRO 5/31/2007 FF 36000 27.03 486000 PSJ PVL PVL 28-Mar-07 JSWSTEEL 5/31/2007 FF 22000 45.45 231000 PSJ PVL VTPL 23-Mar-07 ZEEL 5/31/2007 FF 28000 40.00 238000 PSJ PVL PVL 12-Mar-07 FEDERALBNK 4/26/2007 FF 26000 25.00 130000 PSJ PVL PVL 15-Mar-07 NICOLASPIR 4/26/2007 FF 20900 31.25 167200 PSJ PVL PVL 3,927,200 Legend: PSJ-PSJ Securities Pvt. Ltd; PVL -Pratibhuti Vinihit Ltd.; TTPL-Tungarli Tradeplace Private Limited; VTPL-Vishvesh Trading Pvt Ltd It is seen from the above table that Client Tungarli Tradeplace Private Limited has traded in a total of 14 contracts during the month of March, 2007. The Total COD for the above transactions was Rs 3927200 (Positive). It is further noted that all transactions of TTPL have resulted into profit and in total it has made a profit of Rs.64.52 lacs. The client has dealt through the broker PSJ Securities Pvt. Ltd.

f) Transactions of client - TLB Securities Ltd (TLB) Trade Date Symbol ED OT Trade Qty % to MG COD BTM STM CCN 22-Jan-07 STAR 29-3-07 FF 17000 100 586500 SMC SMC J Narendra 23-Jan-07 SOBHA 29-3-07 FF 5600 100 249200 SMC SMC B Maniklal 23-Jan-07 SUN PHARMA 29-3-07 FF 6300 100 292950 SMC SMC B Maniklal 31-Jan-07 WOCK PHARMA 29-3-07 FF 24000 47.62 360000 SMC SMC J Narendra 31-Jan-07 IOC 29-3-07 FF 24000 95.24 396000 SMC SMC J Narendra 31-Jan-07 PATNI 3/29/07 FF 5,200 12.5 416000 SMC SMC J Narendra 1-Feb-07 LUPIN 3/29/07 FF 7,000 33.34 105000 SMC SMC J Narendra 5-Feb-07 FEDERAL BNK 3/29/07 FF 39,000 83.34 526500 SMC SMC Agarwala Sameer 6-2-07 GUJ ALKALI 3/29/07 FF 84,000 85.72 409500 SMC SMC Arvind A Goyal (Huf) 6-2-07 HTMT 3/29/07 FF 24,000 23.96 528000 SMC SMC Goyal Reena Arvind 3869650 Legend: SMC -SMC Global Securities Ltd.

It is seen from the above that client TLB Securities Pvt. Ltd has traded in a total of 10 contracts during the months of January & February, 2007. The total COD for the above transactions was Rs 3869650 (Negative). It is also noted that all transactions of TLB have resulted into loss and in total it has made a loss of Rs.40.60 lacs. The client has dealt through the broker SMC Global Securities Ltd.

g) Transaction of Client - Pratibhuti Vinihit Ltd. (Broker proprietary account) Trade Date Symbol ED OT GTQ % to MG COD TM CTM CCN 26-Mar-07 ZEEL 5/31/2007 FF 28,000.00 45.46 448,000.00 PVL PSJ TTPL 23-Mar-07 WOCKPHARMA 5/31/2007 FF 12,000.00 33.34 150,000.00 PVL PSJ TTPL 23-Mar-07 MAHSEAMLES 5/31/2007 FF 80,000.00 34.48 780,000.00 PVL PSJ TTPL 23-Mar-07 CHENNPETRO 5/31/2007 FF 36000 27.03 486000 PVL PSJ TTPL 12-Mar-07 FEDERALBNK 4/26/2007 FF 30000 25.00 130000 PVL PSJ TTPL 15-Mar-07 NICOLASPIR 4/26/2007 FF 20900 31.25 167200 PVL PSJ TTPL 26-Mar-07 STAR 5/31/2007 FF 34000 31.25 697000 PVL PSJ TTPL 23-Mar-07 ZEEL 5/31/2007 FF 238000 40.00 238000 PVL PSJ TTPL 3,096,200 Legend: PSJ-PSJ Securities Pvt. Ltd.; PVL -Pratibhuti Vinihit Ltd.; TTPL-Tungarli Tradeplace Private Limited It is seen from the above table that broker (pro account) Pratibhuti Vinihit Ltd has traded in a total of 8 contracts during March 2007. The total COD for the above transactions was Rs.3096200. It is also noted that these transactions have resulted into lass of Rs.30.96 Lacs for the client.

h) Transactions of client -Amar Mukeshbhai Shah Trade Date Symbol ED OT Trade Qty %to MG COD TM CTM CCN 31-Jan-07 Amtek Auto 29-3-07 FF 48000 98.76 624000 KIFSL KIFSL SCK 1-Feb-07 Auro Pharma 29-3-07 FF 28,000 97.56 686000 KIFSL KIFSL SCK 6-Feb-07 HTMT 29-3-07 FF 42,000 41.92 1785000 KIFSL KIFSL SCK 3095000 Legend: KIFSL-Khandwala Integrated Financial Services P Ltd; SCK -Shah Chirag Kirti Kumar It is seen from the above table that client Amar Mukeshbhai Shah has traded in a total of 3 contracts during the months of of January & February, 2007. The total COD for the above transactions was Rs.3869650. It is also noted that these transactions have resulted into profit of Rs.38.69 Lacs for Amar Mukeshbhai Shah. The client has dealt through the broker Khandwala Integrated Financial Services P Ltd

3. Conclusion The findings of the preliminary examination as brought out (supra) indicate a carefully masterminded plan by brokers of the NSE to vitiate the integrity of the futures & option markets. The futures & options markets are still in a stage of infancy in India and are characterised by illiquidity and scarcity of trades in a vast majority of contracts except Nifty Index Futures.

The total turnover in options is only 10% of the total turnover in the F & O segment. For the months of January, February and March 2007, total turnover in the F&O segment was Rs 627456.29 cr, Rs. 703492.2 cr and Rs. 693762.85 crores respectively. Out of this, turnover in stock options was Rs. 19401.42 cr (3.1% of total F& O turnover), Rs. 16785.43 (2.4% of total F& O turnover) cr and 12105.9 crores (1.75% of total F& O turnover)respectively. Thus, the stock option market segment constitutes only around 1.75 % to 3% of the total F & O turnover. Also while relatively, the futures markets have more trading turnover, it is pertinent to note that this market has a long tail and only some contracts are liquid and tradable - Nifty futures and around 10 other stock futures. For the months of January to March 2007, the top 10 stock futures constituted as much as around 35% of the total stock futures turnover thereby indicating that the remaining 145 stock futures are not as liquid /tradable.

In such a situation, these options markets are highly susceptible to Market Manipulation with concomitant adverse effects on price discovery. It may be worthwhile to point out here that futures and Options are unique trading instruments. They can be used for multitude of purposes, providing tremendous versatility and utility. Among their multiple applications are the following: to speculate on the movement of an asset; to hedge an existing position in an asset; to hedge other option positions. Futures and options thus perform a crucial function of assisting in price discovery apart from safeguarding a portfolio of an investor. However, as observed from the findings of the preliminary scrutiny, the brokers and clients have used an ingenious technique to take advantage of the nascent stage of the market and enjoy facile gains at the expense of the lay investors and vitiate entire integrity and utility of the market.

It was seen that the close out (reversal of trade) was being done either for the entire quantity of contract or substantially the same quantity with the same opposite party. However, the difference in the prices at which the above two trades were executed was very significant. It was also observed that these brokers who have been trading either on behalf of their clients (related as well as non-related) or on behalf of their own account have entered into synchronized/structured trades with each other. Further, on most of the occasions the buy order quantity and price was matched with sell order quantity and price. Moreover, it was observed that the buy orders and sell orders were placed within a difference of few seconds (numerous occasions the order times were matched to the exact second). Further, on various occasions when time was not matched by the respective parties, it was observed that the first order was placed at an unattractive price relative to market price. Additionally, it was also seen that one of the parties to the transactions apparently had a positive close out difference whereas the other party had a negative close out difference. Thus, one party has booked profit and other party has booked loss. The apparently matched transactions and their close out transactions were executed in various futures & option contracts on different underlyings. It is also pertinent to note that reversal/close-out transactions were executed at prices with significant variation within a short period though no major variation in the underlying price during the period was observed indicating that these transactions were, prima facie, non-genuine.

The entities have thus indulged in non genuine trade transactions and have created false and misleading appearance of trading on the derivatives market. Such transactions were entered into without intention of change of ownership of the securities. They have also entered into circular transactions to provide a false appearing of trading. The peculiar nature of the trades executed by the Broker and the modus operandi by which the said trades were executed, demonstrate that the said transactions were the outcome of a predetermined and planned action thereby injecting an element of negotiation in the whole scheme of things. It is constructive here to reproduce the observations made in respect of negotiated transactions by the Hon'ble Securities Appellate Tribunal (SAT) in the matter of Ketan Parekh Vs SEBI. ... As already observed 'synchronisation' or a negotiated deal ipso facto is not illegal. A synchronised transaction will, however, be illegal or violative of the Regulations if it is executed with a view to manipulate the market or if it results in circular trading or is dubious in nature and is executed with a view to avoid regulatory detection or does not involve change of beneficial ownership or is executed to create false volumes resulting in upsetting the market equilibrium.... Any transaction executed with the intention to defeat the market mechanism whether negotiated or not would be illegal. Whether a transaction has been executed with the intention to manipulate the market or defeat its mechanism will depend upon the intention of the parties which could be inferred from the attending circumstances because direct evidence in such cases may not be available.... The nature of the transaction executed the frequency with which such transactions are undertaken, the value of the transactions, whether they involve circular trading and whether there is real change of beneficial ownership, the conditions then prevailing in the market are some of the factors which go to show the intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one factor may or may not be decisive and it is from the cumulative effect of these that an inference will have to be drawn.

It is also significant to note that the NSE had in March 2005 issued a circular to brokers, interalia, specifically advising them to desist from entering such transactions as detailed above, as well as orders which, prima facie, appear to be non-genuine on their own account and / or on behalf of their clients. Brokers were further advised to put in place appropriate internal systems and procedures at their end for checking for such orders / transactions before transmitting to the trading system of the Exchange. The circular was issued when the exchange noted that such transactions were being undertaken at that point of time. However, it seems that the brokers have brazenly flouted the advice mandated by the circular and have continued to indulge in such non genuine transactions repeatedly over the investigation period with scant regard to the SEBI mandated code of conduct for Stock brokers (Regulation 7, Schedule II) which interalia, stipulates integrity, due skill, care and diligence as well as compliance with statutory requirements on part of the broker while prohibiting malpractices. The Brokers failed to exercise due skill, care and diligence which are expected from a prudent stock broker who have a duty not only towards its clients but also towards the securities market. I note that the Brokers were a necessary party to the transactions giving rise to artificiality in the market. Instead of exercising caution, the Broker had executed large number of such irregular trades, presumably with prior knowledge and specific instructions and thereby, the Brokers were instrumental in creating artificial volumes. The brokers seem to have wilfully indulged in such malpractices to the detriment of the market at large. The findings of preliminary examination and available evidence prima facie indicated the violation of regulation 3, 4 (1), 4(2)(a&b) of SEBI (Prohibition of Fraudulent and Unfair Trade practices relating to securities market) Regulations, 2003 by these entities and violation of Regulation 7 (schedule II; code of conduct for stock broker) of SEBI (Stock Brokers and Sub brokers) Rules and Regulations, 1992 by the brokers.

Going forward, such acts would only shake the confidence of the investors in the options market and stymie regulatory and market efforts to graduate it into a vibrant and liquid market. It is highly probable that such undesirable practices, as elucidated in the findings earlier, are likely to repeat if not checked immediately. It is therefore imperative that such harmful activities be nipped in the bud at the earliest for safeguarding the fabric of the market. In view of the facts of the case, the contentions adduced above, more particularly the persistence of the entities in perpetrating such transactions, despite NSE circular dated March 10, 2005. I am convinced that to safeguard the interest of the investing public, immediate and appropriate action is warranted at this juncture and concomitantly the need for an ad-interim order becomes necessary. The present order also takes into account the need to ensure orderly development of the options market and the directions are accordingly based.

4. Order 4.1 Therefore, in exercise of the powers delegated to me by the SEBI Board in terms of Section 19 of the Securities and Exchange Board of India Act 1992 read with Section 11B and 11D, I hereby, by way of ad interim, ex-parte order, direct as under:

a) The following entities -Rakhi Trading P Ltd, Kasam Holding P Ltd, Tungarli Tradeplace P Ltd, Manu Vyapar P Ltd, Raj Corporation Ltd., TLB Securities Ltd, Amar Mukeshbhai Shah, Shah Chirag Kirtikumar, Amit Business Ltd and Suresh Bharrat are directed to cease and desist from indulging in the above mentioned violations till further orders.

b) The following brokers - Kumar Share Brokers Ltd., CPR Capital Services Ltd., SMC Global Securities Ltd., Khandwala Int. Fin. Ser P Ltd, Shilpa Stock Brokers P Ltd., Angel Capital & Debt Market Ltd, Vibrant Securities Pvt. Ltd., Systematix Shares & Stk (India) Ltd, Steel City Securities Ltd, Ashika Stock Broking Limited, Prashant Jayantilal Patel, Indiabulls Securities Ltd., PSJ Securities P ltd., Pratibhuti Vinihit Ltd. and Manu Stock Broking (P) Ltd. are directed to cease and desist from indulging in the above mentioned violations, till further orders.

c) The aforesaid directions are without prejudice to any other action that may be initiated against the above entities and brokers.

d) This order shall come into force with immediate effect. However, the entities/persons against whom this order is being passed may file their objections, if any, within 15 days from the date of this order and, if they so desire, may avail themselves of an opportunity of personal hearing at the Securities and Exchange Board of India, Head Office, Plot C4A, G Block, Bandra Kurla Complex, Bandra East, Mumbai 400 051 on a date and at a time to be fixed on a specific request, to be received in this behalf from the entities/persons within 15 days from the date of this order, in which case their representations shall be considered and a final view taken. If they do not respond within such stipulated time, it shall take final effect against them.

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Securities Appellate Tribunal

In Re: Dealing In Futures And Options ... vs Unknown on 18 June, 2007