The National Stock Exchange on July 6 sought the reason for placing an order for certain Nifty futures trades at a significantly higher rate than the prevailing price.
The exchange has received some inquiries about certain Nifty futures trades that were higher than the prevailing price on July 5, 2021.
The country’s leading exchange clarified that on July 5 at the time of market opening, a trading member’s dealer placed a manual buy order for Nifty Near Month Futures in the first few seconds upon opening of the market at a price that was significantly higher than the prevailing price in the market.
Also Read: NSE seeks reason from a member for certain Nifty futures trades order at significantly higher price than prevailing rate
Atish Matlawala, Sr Analyst, SSJ Finance & Securities helped us to decode what really happened and what should investors’ watch out for:
What really happened?
On July 5, 2021, at the time of market opening, a trading member’s dealer placed a manual buy order for Nifty near month future at a price that was significantly higher than the prevailing price in the market.
Since the order was within the operating range, the order matched with existing sell orders in the order book, and two trades got executed at a price within the trade execution range.
What is a manual buy order?
Those orders which are manually entered are called manual orders. It can be either buy or sell.
What led to the price rise?
We believe since the trade took place as soon as the market opened there may not have been many sellers and this has led to a spike in Nifty. If there would have been a seller at a lower price, then it would not have led to a spike in Nifty.
Has it happened in the past as well?
It has happened a few times in the past as well and it can happen in the future as well. NSE being a platform provider is answerable to the regulator (SEBI) and thus wants all its members to be very careful while executing the trades.
What should investors do in case they get stuck?
Investors must be careful while executing the trade. Whatever gain/loss arising from such trade has to be borne by the investor. Although in a very rare case NSE can reverse all the trades executed during a particular time.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
