Penny stock on BSE swings between Rs 149 and Rs 2 in single session

One possibility being speculated is that the circuit filters may not have been functioning at the time the trade was executed.

On August 14, something bizarre happened in shares of BSE-listed stock Vision Corporation. The stock opened at Rs 149.15. That in itself would not have been unusual, except for a small detail. The opening price was at 9330 percent (yes, you read it right) higher than the previous day’s closing price of Rs 1.58.

Vision Corporation, a penny micro-cap stock is currently in the Graded Surveillance Mechanism (GSM) Phase 2 list of the BSE. GSM is a framework used by stock exchanges to monitor and regulate trading activity in a stock, usually those with low liquidity.

After opening at Rs 149.15 that day, the stock promptly fell to Rs 1.58 and stayed there for the rest of the session. In all, 9384 shares were traded in that session, with 9342 shares actually changing hands. The identity of the buyers and the sellers could not be confirmed.

But brokers are puzzled as to how the system accepted the order at a price which was way off from the current market price and how coincidentally there was a counterparty for that trade at that very moment. Stock exchanges have an intra-day circuit filter mechanism, which varies between 2-20 percent and orders placed on either side beyond the limit for the day are rejected automatically.

“It seems to be an adjustment trade,” said a broker who did not want to be named, meaning a deal that was negotiated by the buying and selling parties before being entered into the system. An adjustment trade is market slang for trades done either to launder money or evade tax.

If either the buyer or seller had punched in the price by mistake, they would have approached the exchange seeking annulment of the trade. It is likely that one of the parties may have placed a market order and would have been hit by the freak order.

But if nobody approached the exchange, it could mean the deal was an intentional one. The question still remains: how did the trade find its way into the system?

BSE declined to comment.

One possibility being speculated by brokers is that the circuit filters may not have been functioning at the time the trade was executed. Another theory is that there may have been a glitch in the system when the intra-day limits were being changed.

This is the second instance in the same month, when an order way off the current market price found its way into the stock market trading system and got executed.

Something similar happened on August 11 on the NSE when a bunch of freak trades powered by an algo in Nifty Bank put options of 45700 strike caused an over 90 percent drop in the premia briefly, before those trades were squared up. These clients ended up selling (or writing) put options for a premium of Rs 90 when the prevailing premium at that point was around Rs 1300. Read all about it here.

Trading in shares of Vision Corp was frozen at Rs 1.90 on September 1, after there were only sellers.