UNUSUAL TRADING PRACTICES ATTRACT PENALTY

Stock exchanges today warned brokers and traders of strong penal action if they fail to contain unusual or abnormal trading activities, even after issuance of "caution letters" to them. The bourses had started the process of issuing caution letters last year, wherein the brokers and traders were alerted about abnormal or unusual trading activities in the account of their clients. The latest warning comes in the wake of recurrence of such activities even by those brokers who have been issued such caution letters. "The trading members are once again advised to take adequate measures to ensure that similar (abnormal and unusual) trading activity is not continued by/through them post issuance of observation/caution letters by exchange," BSE and National Stock Exchange said in separate circulars. "Continuance of unusual/abnormal activity by the member/clients may attract appropriate disciplinary/regulatory action against the trading member/ client in co-ordination with Sebi,"they added. The decision is aimed at identifying and alerting the market participants, including brokers and their clients, at an early stage about the unusual or abnormal activities. The bourses have also asked the brokers to inform their clients about the latest move.