ONGC auction: Uncovering the mystery of 12 crore shares

Sajeet Manghat of CNBC-TV18 reports that there was a technical issue in the last phase of the auction. The selling brokers are the six bankers who were assigned to the job of placing the bids. One of the bids, a huge bid of Rs 3540 crore, failed to register on the BSE platform, and as a result, there was a short fall. That’s the reason why the numbers were showing as the auction being undersubscribed while some of the sources in ONGC and some of the sources in government too were saying that it was fully subscribed, explains Manghat.

It was LIC that had submitted a bid for 12 crore shares, which roughly works out to Rs 3540 crore, and that bid was submitted by a selling broker on the exchange platform.

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Now on an exchange platform, you can either submit the bid via self funding or through custodian for funding. The guidelines of auction are very clear that the money has to be in your account to submit a bid. What happened was that the selling broker mistakenly chose the self-funding option and the moment that button was clicked, the system generated an error saying that there is insufficient fund and the bid was rejected. So the order book did not reflect that bid.

By the time the selling broker realized it and then went back to custodian funding, it was already 3:32 pm. The auction closed at 3:30 pm as per Sebi guidelines. Since then, there has been a series of negotiations that have been happening between the exchanges, the custodians, the bankers, Sebi and with the finance ministry officials. Finally, they have decided to call it a technical error and allowed this bid to go through.