Earlier this week, the Securities and Exchange Board of India (SEBI) announced that stock exchanges would have the option to move to a T+1 (Trade Date+1 Day) stock settlement cycle starting from January 1, 2022. While many have welcomed the proposal, a lot of concerns have emerged regarding the implementation of the new system. In this article, we take a closer look at how this move could impact the stock exchanges and market participants.
What is the T+1 Settlement Cycle?
Stock exchanges around the world follow a well-defined clearing and settlement system. Since 2003, India’s NSE and BSE have been offering the T+2 settlement cycle. Here, ‘T’ stands for the date of transaction, and ‘2’ denotes how many days later the transfer of stock ownership and payment to the buyer and the seller, respectively, takes place. Let us look at an example.
Suppose you buy 100 shares of ITC Limited at Rs 200 per share on September 1. The total buy value is Rs 20,000. The day you make the transaction is referred to as the trade date or ‘T Day’. An amount of Rs 20,000 (plus all applicable charges) will be debited from your trading account on that date. On T+1 (Sept 2), the amount required to purchase the shares is collected by the exchange. The exchange transaction charges and Securities Transaction Tax (STT) is also collected. On T+2 (Sept 3), the shares are debited from the Demat account of the person who sold you the shares and credited to the broker with whom you are trading. The broker will then credit the 100 shares to your Demat account. On T+2, the amount that was debited from your end is credited to the person who sold the shares.
Now, SEBI has introduced a shorter settlement cycle— the T+1. Once you place a buy order for a stock, the entire settlement process will be completed within the next day. A stock exchange will have to give at least one month’s prior notice to the public regarding the move to a T+1 settlement on any stock. After opting for a T+1 cycle for a stock, the exchange will have to mandatorily continue with the same system for a minimum of six months.
How Will This Move be Beneficial?
The move to a T+1 cycle will accelerate the entire settlement process. It would benefit retail investors as they will get quicker access to cash and securities (shares) after trades are executed. Moreover, it will reduce the risks associated with fluctuations in share prices during the settlement cycle.
A shorter settlement cycle will provide greater flexibility to the stock exchanges. It will make them more efficient, free up capital, boost liquidity, and reduce default risks. [Default risks refer to the inability to make timely payments]. NSE and BSE had moved from a T+3 cycle to T+2 on similar grounds in 2003.
Concerns Regarding SEBI’s Proposal
Zerodha co-founder Nithin Kamath posted a tweet stating a potential complication of the move to a T+1 settlement cycle. He said the concerned authorities may need to figure out how the settlements will work if one exchange adopts T+1 and the other is on T+2 when the same stock trades on both exchanges. A mismatch in the settlement cycle will prove to be confusing and chaotic for investors and traders. It may affect trading volumes as well. However, many experts argue that either NSE and BSE will both move to the T+1 cycle, or both will stick to the current regime.
Many operational and technical challenges need to be tackled before implementing the T+1 settlement system. All institutions involved in the stock market (brokers, exchanges, banks) will have to increase their efficiency for the delivery of shares and exchange of money within one day. This move will lead to an increase in the working capital requirements for brokers. Banks and depository participants will face extended working hours. These institutions could pass down the costs to us investors and traders.
Pressure from FPIs
T+1 might prove to be difficult for certain classes of institutional shareholders. The Association of National Exchange Members of India, the Asia Securities Industry and Financial Markets Association (ASIFMA), and overseas traders have expressed concerns over the operational and technical implications of the move. Since working hours in the US and Europe are not aligned to Asia Pacific markets, T+2 settlement effectively functions as T+1. Any error or disparity in a transaction is normally discovered on T+1. Thus, shortening the settlement cycle could lead to high costs and settlement risks for Foreign Portfolio Investors (FPIs).
A move to a T+1 cycle in India would mean that FPIs will have to keep money and shares ready with them on the day of the transaction. Thus, inflows from foreign investors would be adversely affected. FPIs have written to SEBI regarding a potential reversal of market gains due to unforeseen consequences of moving to the new system.
What are your views on SEBI’s proposal for a move to a T+1 settlement cycle? Let us know in the comments section of the marketfeed app.
Stock exchanges are the powerful platforms or marketplaces that allow us to invest or trade in securities. Most beginners in the stock market have a doubt regarding the exchange they should transact in— whether it should be BSE or NSE. In this article, we dive into the two prominent stock exchanges of India. We shall also analyse the factors that helped NSE become our country’s largest stock market exchange.
A Brief Profile on NSE and BSE
The Bombay Stock Exchange (BSE) was established way back in 1875. Located in Dalal Street, Mumbai, it is the oldest stock exchange in Asia. There are more than 5,400 companies listed on the BSE. Its benchmark index, the S&P BSE Sensex, is widely tracked by investors across the globe. The Sensex (Sensitive Index) tracks the performance of 30 of the largest and most actively traded stocks on the BSE. As of 2020, BSE is the 10th largest exchange in the world in terms of the cumulative market capitalisation of all companies listed on its platform.
The National Stock Exchange (NSE) was incorporated in 1992. It is also located in Mumbai. NSE is ranked the third-largest stock exchange globally in terms of the total number of trades in equity shares. There are more than 1,600 companies listed on the NSE. It is the first bourse in India to implement electronic or screen-based trading. The Nifty 50 is NSE’s benchmark index that represents the weighted average of 50 of the largest companies listed on its platform.
Both NSE and BSE provide a platform for companies to raise funds efficiently. The exchanges allow investors to trade in equities, currencies, debt instruments, derivatives (F&O), and mutual funds. Moreover, they provide services such as risk management, clearing and settlement, and investor education. The exchanges operate under the strict guidelines of the Securities and Exchange Board of India (SEBI).
Factors That Led to the Rise of NSE
For more than a century, BSE had complete dominance over stock trading in India. To break this monopoly and improve transparency in the capital market, our government decided to create the NSE. It was India’s first computer-driven stock exchange and was promoted by some of the leading financial institutions at that time. NSE was given the right to set up trading terminals across the country, while BSE was not allowed to do so. [Trading terminals are intermediary software that allows investors and traders to place buy/sell orders without having to call their brokers]. Meanwhile, it took a few years for BSE to receive permission for the same.
Thus, NSE was able to capture a significant portion of share trading across India. They used state-of-the-art technologies to ramp up the performance of trading systems. NSE was the pioneer of automated and paperless trading in the Indian market. It set up the first depository— the National Securities Depository Ltd (NSDL), which initiated the demat revolution in the country. NSE was also the first stock exchange to establish a clearing corporation (NSE Clearing Limited), which helps reduce trading and settlement risks in the market.
With the arrival of NSE, investing and trading in stock markets became highly transparent, efficient, and less costly.
High Liquidity
Ever since NSE was established in 1992, there has been fierce competition between the two bourses for attracting more trading volumes. Higher volumes would ultimately allow exchanges to obtain more revenue. More importantly, it would lead to better liquidity, an aspect that is vital while trading in shares and derivatives. Higher liquidity allows traders to quickly and easily buy or sell shares at the exact price specified by them.
As a result of its revolutionary offerings, NSE has the highest average daily turnover for equity shares than any other stock market in India. The turnover for an exchange refers to the overall value of shares traded during a certain period.
Let’s look at an example. On July 12, 2021, around 15.76 lakh shares of Reliance Industries were traded on the BSE. At the same time, ~39.6 lakh shares of RIL were traded on the NSE— more than double! Since NSE has high trading volumes, the price a buyer offers per share (bid price) and the price the seller is willing to accept (ask price) will be fairly close to each other. This helps intraday and swing traders enter and exit a trade at the exact price specified by them and realise their targets.
Trading in Derivatives
For those who are not aware of what derivatives trading really is, here’s a quick explanation:
A derivative is an instrument whose value is derived from an underlying asset. The underlying can be a stock, commodity, index, etc. Derivatives are used by large institutions or traders to hedge risk and to speculate on price changes in the underlying asset. Futures and options (F&O) are the most common types of derivatives trading. An agreement (or contract) can be formed between a buyer and seller to buy/sell a predetermined quantity of the underlying asset at a specified price on a specified date. You can learn more about basic options terms here.
Coming back to the point, NSE has always been the most liquid exchange for derivatives. It is the undisputed leader when it comes to futures and options (F&O) trading. This is clear when you compare the volumes (options chain) of F&O activated stocks on NSE and BSE. In most instances, there are zero contracts formed in BSE. On the other hand, NSE’s Nifty 50 and Bank Nifty are traded heavily in the stock market.
Conclusion
Despite its exceptional growth, NSE lags behind BSE on one aspect: the brand. Sensex is still widely used across the world to measure the health of the Indian markets and the economy.
To summarise, NSE is the preferred exchange for intraday, swing, and derivatives trading due to high liquidity. If you are a long-term investor, it does not really matter where you buy/sell shares. However, BSE gives access to more than 5,000 stocks across various sectors. There could be a minor/insignificant difference in the prices of scrips in NSE and BSE. The costs related to investing and trading are similar for both exchanges.
Over the past few years, stock exchanges have come under the scanner due to frequent technical glitches. You may recall the four-hour-long halt in NSE’s trading system that occurred in February 2021. The exchange informed that the instability of telecom links from two of its service providers had affected the functioning of its risk management system. Unfortunately, it resulted in heavy losses for investors. There was a complete lack of accountability from NSE.
Recently, SEBI came out with a standard operating procedure (SOP) to curb technical glitches in stock market operations. NSE and BSE could face a penalty of up to Rs 2 crore or more if they fail to respond to technical disruptions within 30 minutes and restore operations within 45 minutes. Stock exchanges and other market infrastructure institutions (MIIs) will have to submit a root cause analysis report within 21 days of an accident.
Let us hope such events do not occur in the future!
You would have often seen the term ‘block deal’ used in our articles. But, are you aware of what it really means? Let’s clear all the doubts one set for all!
Block Deals
A block deal is said to be a trade where more than 5,00,000 shares or shares worth more than Rs 10 crore of a particular company are traded. This should happen as a part of a single transaction. The deal cannot be squared off as we do with our intraday positions. Once done, it cannot be reversed. The price at which this is done should be between +1% to -1% of the current market price or the previous day’s closing price.
Also, the broker has to inform the exchange of any kind of block deals. The details which have to be passed on to the exchange include the following:
Name of the scrip.
Name of the clients (Buyer & Seller).
The number of shares bought or sold.
The traded price at which the deal is done.
Stock exchanges are bound to inform the public about the deal with all the details on the same day after market hours. Generally, HNIs (high net worth individuals), mutual funds, financial institutions, insurance companies, banks, venture capitalists and foreign institutional investors (FIIs) are the participants of these block deals. To learn more about FIIs, click here. Promoters of the company can also use this window to buy or sell a major chunk of their share.
Block Deal Timings
As a block deal involves a large number of shares, it is important to allot a particular time slot. Otherwise, a surprising block deal at any time can increase volatility in the market. The exchange has made two slots for any type of block deal to take place.
Morning Window (First Session): 08:45 AM to 09:00 AM
Afternoon Window (Second Session): 02:05 PM to 2:20 PM
You must have seen us talking about India VIX on The Stock Market Show on YouTube and our Pre-Market Reports. But are you really aware India VIX is? Does it tell you something about the market? How should retail investors read this parameter? Find all about this here!
India VIX
VIX stands for Volatility Index. This tells that India VIX is nothing but India Volatility Index. It tells about the volatility which can be expected by the investors in the Indian market. In simpler terms, volatility is referred to as the “rate and magnitude of changes in prices” expected in either direction. Originally, VIX is a trademark of the Chicago Board Options Exchange. The National Stock Exchange of India (NSE) has been granted a license to use this mark with the name of India VIX.
The calculation of this volatility index is done with the help of the NIFTY Index Option prices. It is the representation of the annualized change that can be expected in the Nifty 50 for the duration of the next 30 days. Do focus on the word annualized change. Let’s take an example to make it clearer.
Suppose India VIX is 20.97%. That means for the next 30 days, Nifty 50 is expected to move in either direction by the investors by an annualized rate of 20.97%. The value of VIX cannot go below 0 and cannot exceed 100.
How Does Vix Affect You?
It has been seen previously that VIX and Nifty move in opposite directions. We saw the biggest example of this during Covid-19 last March. On 24th March 2020, India VIX touched the mark of 83.63! This is when the market was unpredictable due to the Covid-19 lockdowns around the world. But, do not judge the direction of the market with the movement in VIX. The India VIX will only tell how big a move can happen in the market irrespective of the direction.
The higher the VIX, the higher the risk is for retail investors. Equities may not be a very safe asset class when VIX is unusually high. India VIX is said to be normal if it is around the 20-mark, which it is currently at as of April 2021.
You cannot buy/sell India VIX, it is not a tradeable index.
NSE, ONGC buys stake in IGX from Indian Energy Exchange
Indian Energy Exchange (IEX) has divested 26% of its equity holding in Indian Gas Exchange (IGX) to the National Stock Exchange of India. NSE will purchase 1.92 crore equity shares of IGX from IEX for Rs 19.20 crore. IEX has also sold 5% of its equity holding in IGX to the Oil and Natural Gas Corporation (ONGC) for Rs 3.69 crore. “Having NSE and ONGC as partners is a natural choice in the endavour to deepen India’s gas markets,” said S N Goel, Chairman & MD of IEX.
Easy Trip Planners IPO subscribed 159 times on final day of bidding
The Rs 510-crore initial public offering (IPO) of Easy Trip Planners was subscribed 159.30 times on the final day of bidding. The issue received bids for 240.27 crore equity shares against an offer size of 1.5 crore shares. The portion reserved for retail investors was subscribed 70.40 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 382.21 times and that of qualified institutional buyers (QIBs) 77.53 times.
Passenger vehicle sales grow 18% in February: SIAM
According to data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales increased by 17.92% year-on-year (YoY) to 2.81 lakh units in February. The utility vehicles (UVs) segment saw a growth of more than 45% YoY. Sales of two-wheelers rose 10.20% YoY to 14.26 lakh units last month. The data also shows that sales of three-wheelers declined by 34% YoY to 27,331 units in February.
Vodafone Idea partners with Disney+ Hotstar to provide one year of free content to users
Vodafone Idea (Vi) has partnered with Disney+ Hotstar to offer one year of VIP membership to its customers. Vi prepaid users will get three new unlimited recharge plans including one data-only plan with Disney+ Hotstar VIP subscription. The telecom company’s postpaid users can get access to the streaming service on plans starting at Rs 499. The offer comes just in time for the upcoming IPL cricket season, which begins on April 9.
Hitachi ABB Power Grids secures orders worth Rs 160 crore to supply transformers to Indian Railways
Hitachi ABB Power Grids in India has secured orders worth Rs 160 crore from the Government of India’s electric locomotive manufacturer, Chittaranjan Locomotive Works (CLW), and the Central Organization for Rail Electrification (CORE) to power electric freight locomotives for the Indian Railways. The company will deliver traction transformers to CLW for one of Indian Railways’ most successful classes of locomotives- the WAG 9. The firm will also supply trackside transformers to CORE.
Magma Fincorp’s shareholders approve plans to raise Rs 3,456 crore by issuing shares to Rising Sun Holdings
Magma Fincorp Limited announced that its shareholders have approved the company’s plans to raise Rs 3,456 crore by issuing preference shares to Adar Poonawalla-controlled Rising Sun Holding Pvt Ltd (RSHPL) and two members from the promoter group. Around 49.37 crore preference shares will be issued at Rs 70 per share to RSHPL and the two promoters. After the transaction, RSHPL will hold a controlling stake of 60% in Magma Fincorp.
Sun Pharma’s subsidiary acquires 12% stake in Australia-based WRS Bioproducts
The Australian subsidiary of Sun Pharmaceutical Industries Ltd has acquired 4.28 lakh shares (or 12% fully diluted equity stake) of WRS Bioproducts Pty Limited. The total value of the acquisition was AUD 2 million (~Rs 11.24 crore). WRS Bioproducts is engaged in developing novel technologies to produce and commercialise supplements and nutraceutical ingredients from diverse algae species in Australia.
Man Infra’s subsidiary secures order worth Rs 84 crore
Man Vastucon, a wholly-owned subsidiary of Man Infraconstruction Ltd, has received an order worth Rs 84.32 crore from Mira Shaindar Municipal Corporation (MSMC). The scope of work consists of the construction of an auditorium situated off Western Express Highway, Mira Road East, Thane. The project will be completed and handed over to MSMC within a year.
Dr Reddy’s gets 3 observations from USFDA for US-based API plant
Dr Reddy’s Laboratories said that the US Food & Drug Administration (USFDA) has issued a Form 483 with three observations after inspecting its active pharmaceutical ingredients (API) manufacturing plant in Middleburgh, New York. Form 483, which is issued to a firm at the end of an inspection, specifies any conditions that may be in violation of the Food Drug & Cosmetic Act or other regulations. Currently, Dr Reddy’s does not have any sales from this API plant.
Quick Heal Technologies’ board approves proposal for Rs 155 crore share buyback plan
The Board of Directors of Quick Heal Technologies has approved the proposal to buyback 63.26 lakh equity shares at Rs 245 per share. This represents 0.85% of the total paid-up equity share capital of the software company. The total buyback size will be Rs 155 crore. The board has also approved the de-registration and closure of the company’s wholly-owned subsidiary, Quick Heal Technologies Africa. This closure was part of the firm’s recently concluded business reorganisation exercise.
Board of Shriram EPC approves the issuance of preference shares worth Rs 350 crore to lenders
The Board of Directors of Shriram EPC, on Wednesday, discussed and cleared the issuance of non-convertible redeemable preference shares (NCRPS) worth Rs 350 crore to the lenders of the company against their loans and for other related activities. Shriram EPC is a construction company based in Chennai.
India’s manufacturing PMI falls marginally in February
India’s factory activity expanded for the seventh straight month in February, driven by strong demand and increased output. The IHS Markit Purchasing Managers’ Index (PMI) for India’s manufacturing sector eased slightly to 57.5 in February from 57.7 in January. Last month, firms responded to rising production needs by boosting their purchasing activities. PMI is a month-on-month calculation, and a value of more than 50 represents an expansion when compared to the previous month.
Automobile companies register strong sales growth in February
Major automobile companies reported healthy sales growth during February 2021. Tata Motors posted a 51.1% YoY jump in total sales to 61,365 units, as passenger vehicle (PV) sales surged two-fold to 27,225 units. Maruti Suzuki reported an 11.8% YoY increase in overall sales to 1.64 lakh units in February. Bajaj Auto posted a 6% YoY rise in total sales to 3.75 lakh units during the same period. Farm equipment manufacturer Escorts reported a 30.6% YoY increase in tractor sales to 11,230 units in February.
BPCL approves sale of its 61.65% stake in Numaligarh refinery for Rs 9,875 crore
Bharat Petroleum Corporation Ltd’s (BPCL) board has approved the sale of its 61.65% stake in Numaligarh Refinery Ltd (NRL) for Rs 9,875 crore. The consortium of Oil India Ltd (OIL) and Engineers India Ltd will acquire 49% stake. The remaining 13.65% will be sold to the Government of Assam. The sale of NRL is considered to be the first step towards the disinvestment of BPCL.
Sterlite Tech secures orders worth $100 million in Middle East, Africa
Sterlite Technologies Ltd (STL) has secured orders worth $100 million (~Rs 734 crore) in the Middle East and Africa for setting up the network and infrastructure for 5G wireless services. The multi-year deals range from providing optical connectivity solutions to network solutions. With these new deals, the STL’s order book stands at a record Rs 11,300 crore.
Godrej Properties acquires land parcels worth Rs 166 crore for residential project in Navi Mumbai
Godrej Properties Ltd has emerged as the highest bidder for two adjacent land parcels in Navi Mumbai for a total bid value of Rs 166 crore. The e-auction was conducted by Maharashtra’s City and Industrial Development Corporation (CIDCO). The company will develop a residential project on the 1.5-acre land located in Sanpada, Navi Mumbai. The project is expected to have a development potential of around 4 lakh sq ft.
IndiGo, BOC Aviation signs purchase-leaseback agreement for eight A320neo planes
Singapore-based aircraft leasing firm BOC Aviation has signed a purchase-and-leaseback agreement with InterGlobe Aviation (IndiGo) for eight new Airbus A320 neo planes. The aircraft are scheduled to be delivered in the second half of 2021. As of December 31, 2020, IndiGo had 287 aircraft in its fleet. Out of this, 272 were on operating lease, while the remaining 15 were owned/finance lease.
Siemens acquires 99.2% stake in C&S Electric for Rs 2,100 crore
Siemens Limited has completed the acquisition of a 99.22% equity share in C&S Electric Ltd for Rs 2,100 crore. The Competition Commission of India (CCI) had given its approval for the deal on August 20, 2020. The acquisition will enable Siemens to address the competitive infrastructure low-voltage market in India while creating a manufacturing hub to source low-voltage products for export to competitive markets globally.
Bharat Dynamics Limited said it has received an order worth Rs 372.98 crore for supplying MRSAM Missile Rear Sections for the Indian Air Force. The order is said to be executed on or before November 30, 2023. Hyderabad-based Bharat Dynamics is a leading manufacturer of defense equipment such as ammunitions and missile systems.
MCX signs MoU with NSE, India INX, NSDL, and CDSL to set up new entity at GIFT City
Multi Commodity Exchange of India Ltd (MCX) has signed a Memorandum of Understanding (MoU) with National Stock Exchange (NSE), India International Exchange IFSC Ltd (India INX), National Securities Depository Limited (NSDL), and Central Depository Services (India) Ltd (CDSL) for setting up Market Infrastructure Institutions comprising of International Bullion Exchange, Clearing Corporation and Depository at Gujarat International Financial Trade (GIFT) City.
[Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins]
Biocon Biologics, Viatris Inc. gets CHMP approval for Abevmy
Biocon Biologics, a subsidiary of Biocon Ltd, announced that the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) has recommended the approval of its biosimilar- Bevacizumab- to be marketed as Abevmy. The product was co-developed with US-based Viatris Inc. Abemby is indicated for the treatment of metastatic breast cancer, non-small-cell lung carcinoma, as well as ovarian, cervical, and renal cancer.
The price feed for indices on the National Stock Exchange (NSE) has frozen. Nifty 50 has not made any movement since 10:08 AM. The index stood at 14,820.45, up 112.65 points or 0.77%. All sectoral indices on the NSE (Nifty Bank, Nifty Financial Services, etc) are frozen as well. However, the stocks listed on Nifty 50 were being updated in their usual form.
Due to this technical glitch, NSE closed the futures and options (F&O) market at 11:40 AM and the cash market at 11:43 AM. NSE stated that the update for the re-opening will be shared later.
“NSE has multiple telecom links with two service providers to ensure redundancy and we have received communication from both the telecom service providers that there are issues with their links due to which there is an impact on NSE system. We are working on restoring the systems as soon as possible,” the exchange said in an official statement.
“Trading is halted on NSE across brokers. We are waiting for it to come back online. For equity orders, you can use BSE,” said Zerodha in a tweet.
Meanwhile, industry majors had commented that the market will open at 1 pm. NSE in a statement to ET Now remarked that this is not confirmed.
An important point to be noted is that all open (or unexecuted) orders will be cancelled before the markets reopen. Thus, cover order (CO) positions on NSE will be squared-off. Cover orders will remain blocked for the remainder of the day, according to a notification by Zerodha.
Meanwhile, stock prices are moving on BSE and trades are open. Sensex is trading above 50,000, no major correction yet happening. You can sell your holdings on the Bombay Stock Exchange, if in need of liquidity.
Recent Updates
At around 2:50 PM, Zerodha notified that if NSE does not open for the day, all Margin Intraday Square (MIS) orders and CO orders in the F&O and Currency Derivative Segment (CDS) will get carried over to tomorrow (25/02/2021) with today’s buy/sell entry price.
According to reports from CNBC TV-18 and ET Now, the equity and equity derivatives market on NSE and BSE will be open till 5 PM today. The reports state that Pre-open trade will be from 3:30 to 3:45 PM. Normal trading will take place in all segments between 3:45 to 5 PM.
At 3:40 PM, Zerodha updated that all F&O MIS positions will get squared off at 4:15 PM. Moreover, all F&O cover order (CO) positions will forcibly be squared off by 4 PM. Only Cash and Carry (CNC) and Normal (NRML) orders will be allowed in the extended session today.
At 3:45 PM, market resumed trading with Nifty opening 58 points higher. Nifty re-opens above the 14,800 mark and Bank Nifty re-opens above 35,600 levels.
Scams have taken place within exchanges and the stock market, but have you ever heard of a stock exchange itself scamming someone? The National Stock Exchange did exactly that in what is called the ‘NSE co-location Scam’. This scam involved close to 62 brokers, advisories, traders, and the employees of the National Stock Exchange. Here’s a quick brief on what the co-location scam was all about.
What is Co-location?
Generally, brokers and proprietary traders have machines at their offices which are connected to a primary server at the National Stock Exchange through which they place orders. Sometimes, because of too many people trading on this server and technical glitches, there was a delay in placing orders which caused losses to these brokers and proprietary trading firms.
The National Stock Exchange, in the year 2009, started providing ‘co-location services’ to brokers for a fee. In this, brokers and firms were allowed to place their servers within the premises on the National Stock Exchange for a premium. This provided them tick-by-tick price data, faster than others and hence giving an advantage over them. A tick by tick data is the most detailed data available showing each and every trade, every second, that is made on the exchange.
Even though this was a question of a few seconds, this led to huge amounts of profits for the firms that availed of the co-location services. Most of these firms used algorithmic trading or high-frequency trading (HFT), where machines and computers buy and sell shares within a matter of seconds based on algorithms. A faster price feed caused them to profit almost every day out of this.
Co-location services are completely legal and NSE had done nothing wrong in offering these services. However, the Securities and Exchanges Board of India (SEBI) had decided to turn a blind eye to the regulation of this service. SEBI did not launch any ‘working paper’ or strict guidelines regarding these services. Some say that there was a political nexus behind this motive.
The Co-location Scam
Secondary Server: There are two kinds of servers at NSE that process all the trades, primary servers and backup secondary servers. In co-location, broker’s servers were connected with a primary server and in case of a technical snag, they were connected with the backup servers.
Preferential Treatment: Some brokerages tied up with the employees of the National Stock Exchange (NSE) in order to know which secondary server would be switched on and when. These brokers would therefore be the first ones to connect to the secondary server and would later populate the server by connecting more than twice. This would cause the server to act slowly for other brokers due to increased traffic, giving an advantage to them. Mainly, one firm called OPG Securities is said to have taken advantage of the above-given situation. Many brokers were given preferential connections to the servers of NSE. It is said that the senior management of NSE plus some politicians had their personal interests in these firms.
A company named AlphaGrep with the help of a company named Sampark Infotainment set up ‘dark-fiber’ links connecting the NSE servers with its own. A dark-fiber is an unused optical fiber. There is no traffic or disturbance on the dark fiber, which means that AlphaGrep could get the tick-by-tick data faster than others. This was done with irregularities. The company, Sampark Infotainment did not have the necessary licenses from the Department of Telecommunications.
How the Scam Got Public
A whistleblower by the name of ‘Ken Fong’ from Singapore wrote to SEBI in 2015 regarding irregularities in the co-location system in NSE and the use of dark fiber lines. As time passed, the whistleblower wrote more such letters to SEBI and business-media houses. Sucheta Dalal who exposed the Harshad Mehta scam published the first letter on her website MoneyLife, you can check it out here.
Fun Fact: NSE filed a Rs 100 crore defamation suit against MoneyLife for the article regarding the co-location scam, but itself ended up paying 3 Lakhs to MoneyLife in restitution. They were also fined another Rs 47 lakhs to be paid to Tata Memorial Hospital and Masina Hospital in Mumbai.
SEBI formed an Expert Committee (EC) for the preliminary investigation of the claims. The Technical Advisory Committee (TAC) of SEBI investigated the technical matters of the claim. Ironically, the NSE formed a Disciplinary Action Committee(DAC) to act against brokers who were involved in the scam.
Deloitte, Ernst and Young, and the Indian School of Business were appointed to perform a forensic audit of the scam. The Income Tax Department and CBI probed the co-location ‘scam’.
In December 2016, NSE’s then CEO Ms. Chitra Ramakrishna and Vice Chairman, Ravi Narain, resigned. The National Stock Exchange’s IPO was stalled and still has not happened. The NSE was ordered to pay close to Rs 1,300 crores in fines which it tried to recover by fining other brokers and firms involved in the co-location scam.
The Current Situation
In January of this year, regulatory body SEBI dropped charges on nine current and former officials of the exchange, including ex-MD and CEO Ravi Narain, saying they cannot be held responsible for any misconduct or non-compliance in the so-called ‘dark-fibre issue’. Then who can be held responsible?
What happens when the people and institutions who are supposed to protect us turn villains? Are these fines enough to stop or scare them? Is this not comparable to cheating retail consumers? And why was no one sent to jail even after clearly profiteering and getting caught? A lot of questions remain unanswered. NSE is even saying that it has ‘strong grounds to contest the above orders including monetary liability raised by SEBI’.
Would certainly love to get more clarity on who actually are involved, with the top courts of the country taking strict action against officials trying to loot us.
You can read more about the co-location scam in the official SEBI order over here.
Serum Institute seeks emergency use authorisation of Covidshield in India
The Serum Institute of India (SII) has sought approval from the Drugs Controller General of India (DCGI) for emergency use authorisation (EUA) of the AstraZeneca-Oxford vaccine, Covidshield, in the country. It is the second firm, after Pfizer, to seek EUA approval from the Indian drug regulator. SII is currently conducting Phase-3 clinical trials of Covidshield in India, with the support of the Indian Council of Medical Research (ICMR).
Jet Airways may restart operations by summer of 2021
The consortium led by Murari Lal Jalan and Kalrock Capital, on Monday, said that it plans to operationalise Jet Airways by the summer of 2021. They are awaiting approval of the airlines’ resolution plan from the National Company Law Tribunal (NCLT) and other regulatory authorities. As per the resolution plan, Jet Airlines intends to operate all of its historic domestic slots in India and restart international operations.
L&T wins multiple orders for supply of mining equipment to coal, cement sectors
Larsen & Toubro’s (L&T) construction and mining equipment business has secured multiple orders from Coal India subsidiaries and firms in the cement sector. These orders are for supplying 66 units of Komatsu dump trucks, 15 units of Komatsu wheel loaders, 7 units of Komatsu hydraulic excavators, and other allied equipment. The scope of the order includes supplying equipment and maintenance contracts for supporting operations over three to four years.
Hindalco to invest Rs 730 crore to set up new plant in Silvassa
Hindalco Industries Limited announced plans to invest Rs 730 crore to set up a 34,000-tonne extrusion plant at Silvassa, in Dadra. The company stated that the new plant will service the fast-growing market for extruded aluminum products in the western and southern regions. The commercial production at the plant is expected to start in 24 months.
RIL raises Rs $1.4 billion in overseas debt to prepay Reliance Holding’s loans
Reliance Industries Ltd (RIL) has raised $1.4 billion (~Rs 10,342 crore) to prepay its existing foreign loans. The proceeds will be used by RIL to repay the loans of its subsidiary, Reliance Holding USA. Fourteen international banks had signed up for the transaction last week. This is the highest amount raised through debt by an Indian company from international lenders.
IndiGo to refund all passengers for flight cancellations due to Covid-19 lockdown by January 31
Interglobe Aviation Ltd (IndiGo) said that it will refund all customer credit shells, which were created when flights were canceled due to the Covid-19 lockdowns earlier this year. The company stated that it will disburse the full 100% credit shell payments by January 31, 2021. IndiGo stated that it has already processed close to Rs 1,000 crore of refunds, which is 90% of the total amount it owed to customers.
Goodyear India announces interim dividend of Rs 80 per share
The Board of Directors of Goodyear India Ltd has approved an interim dividend of Rs 80 per equity share of face value of Rs 10 each, for FY21. The company has fixed 15 December as the record date for determining the entitlement of the shareholder for the interim dividend. The share price of Goodyear jumped by 14% and closed at Rs 997.65 on the NSE today.
NSE introduces weekly F&O contracts in three more currency pairs
The National Stock Exchange (NSE), on Monday, launched weekly futures and options (F&O) contracts on three currency pairs: Euro-Indian rupee, Japanese Yen-Indian rupee, and Pound Sterling-Indian rupee. The NSE stated that the weekly derivatives on currency pairs will help market participants to hedge their currency exposure from short-term market movements. It will also help in reducing time-related costs.
LTI partners with UAE-based Injazat for accelerating digital transformation in the Middle East
Larsen & Toubro Infotech (LTI) has entered into a strategic partnership with UAE-based Injazat, to implement its best-shore service delivery model in the Middle East. The delivery model will provide Injazat’s customers with a hybrid of delivery approaches including onshore and cloud. LTI will further advance Injazat’s wider digital delivery ecosystem.
BLS International signs contract with Brazil Embassy in China to operate visa application centres
BLS International Ltd announced that it has commenced accepting appointments for visa applications for the Embassy of Brazil in China. The five-year exclusive contract from the Embassy mandates BLS to operate 15 centres across China. The company is expected to process over 4,00,000 applications over the next 5 years.
SpiceJet plane undershoots runway in Guwahati; DGCA grounds 2 pilots
A SpiceJet plane undershot the runway while landing at the Guwahati airport on Friday. The Directorate General of Civil Aviation (DGC) has grounded the two pilots who were operating the Bengaluru-Guwahati flight. Officials stated that none of the passengers was hurt in the incident. The DGCA is investigating the incident.
Covaxin efficacy can be determined only after 2 doses, says Bharat Biotech after Haryana Minister tests positive
Haryana Home Minister Anil Vij, on Saturday, tested positive for Covid-19 despite taking a Covaxin trial shot. The vaccine’s developer, Bharat Biotech, clarified that Covaxin’s efficacy can only be determined after 14 days of the second dose. The minister was only administered the first trial dose two weeks ago. The company further said that 50% of the trial participants received the vaccine, while others were administered a placebo.
Tata Consumer Products’ subsidiary to sell MAP Coffee Business for Rs 6 crore
Tata Consumer Products Ltd (TCPL) said that its Australian subsidiary, Earth Rules, is selling MAP Coffee Business to Buccheri Group Pty Ltd for Rs 6.74 crore. MAP Coffee supplies Australian cafes, restaurants, and bars with a range of Italian roasted coffee. It joined TCPL in 2014. Post completion of the transaction, Earth Rules will continue to be a step-down subsidiary of TCPL.
All states accept Centre’s borrowing plan to meet GST shortfall
All the 28 states and 3 Union Territories have accepted the Central Government’s Option-1 to meet the revenue shortfall arising out of GST implementation. The Centre has already borrowed an amount of Rs 30,000 crore on behalf of the states in five installments and has passed it on to the states and UTs. The next installment of Rs 6,000 crore will be released to the states/UTs on December 7.
The National Stock Exchange has revised the circuit limits of 302 stocks with affect from Monday (December 7). The circuit limit of Adani Gas, Angel Broking, Arvind Fashions, Central Bank of India, Emkay Global, and Snowman Logistics has been revised to 20% from 10%. The circuit limits of Reliance Communications, Reliance Infrastructure, Reliance Home Finance and Shree Renuka Sugars has been revised to 10% from 5%.
Petrol price hits two-year high of Rs 83 a litre, diesel at Rs 73.32
Petrol price on Saturday crossed the Rs 83 per litre mark in Delhi for the first time in more than two years. The diesel price went up to Rs 73.32 per litre. The rally in international oil prices has forced the rates to increase for the 13th time in 2 weeks. The oil companies had resumed daily revision of fuel prices on November 20, after a break of 2 months.
Oil and Natural Gas Corporation (ONGC) announced that its overseas subsidiary, ONGC Videsh, struck commercial oil in one of its Colombian blocks. This is the fourth commercial find in the block by ONGC Videsh Ltd. The company’s oil well ‘Indico-2’ is flowing under short term testing for further evaluation.
Tata Motors Ltd has delivered 26 all-electric buses to Brihanmumbai Electric Supply and Transport (BEST). These were delivered as a part of the larger order of 340 electric buses from BEST, under the Government of India’s FAME II initiative. The company stated that the rest of the units will be delivered in a phased manner as per schedule
Sobha Ltd to invest Rs 1,000 crore in Delhi and Gurgaon to develop 2.76 million sq fr
Sobha Ltd said it will invest close to Rs 1,000 crore in Delhi and Gurgaon to develop 2.76 million sq ft, to expand its presence in the Delhi-NCR region. The company recently entered into a joint development agreement with a Delhi-based builder to develop 1 million square feet in Delhi’s Badarpur. They are also in talks with developers to build 1.73 million sq ft in Gurgaon.
All companies need to raise funds to invest in new projects and grow. Firms can raise capital through equity, debt, or invest their retained earnings back into the business. An Initial Public Offering (IPO) is a way for established companies to raise equity capital. In this article, we will understand what an IPO is, how it works, and its benefits & drawbacks to a company.
What is an IPO?
An Initial Public Offering (IPO) is the process by which a privately owned company issues its shares to the public for the first time. It transforms the company from being a privately owned entity to a publicly traded one. An IPO is one of the methods through which companies can raise required capital by issuing shares.
An IPO can have two parts: a fresh issue and an offer for sale (OFS).
A Fresh Issue refers to when a company sells new shares to the public for the first time. These shares have never been traded publicly before.
Through an Offer for Sale (OFS), existing shareholders like founders, early investors, or employees of a company sell their shares to the public. These shares were previously held by insiders and are now being sold to external investors during the IPO.
Thus, an IPO is also a method for early investors and founders to exit their investments.
Why Do Companies Go Public?
Companies decide to go public for various reasons:
Capital Generation: One of the primary reasons for an IPO is to raise capital. Going public allows a company to access a more extensive pool of investors and generate funds for various purposes, such as expansion, research and development, debt reduction, or acquisitions.
Liquidity for Existing Shareholders: An IPO provides an opportunity for existing shareholders, including founders and early investors, to sell their shares and realize the value of their investments.
Enhanced Visibility: Being a publicly traded company increases visibility and credibility, which can attract customers, partners, and additional investment opportunities.
How Does an IPO Work?
An IPO is a complex and time-intensive process. Here’s a basic outline of how an IPO works:
1. Deciding the Mode of Raising Capital
The primary step in an IPO process is to decide how a company (say, XYZ Private Ltd) wants to raise capital. It can raise funds through equity or debt. XYZ can borrow money from banks, venture capitalists, private equity firms, and other financial institutions to meet its financial needs. However, borrowing may be unfavourable for companies at times, especially when it’s in the initial stages and needs more cash flow to service the debt.
Once the company decides to raise capital through equity, it must decide whether to raise it privately or publicly. IPO is an option for raising capital publicly.
2. Appointment of Investment Bankers
Before a company files for an IPO, it needs to prepare its financial statements, undergo audits, ensure regulatory compliance and satisfy requirements. It will appoint investment banks and underwriters that perform various functions on behalf of the company. These entities act as intermediaries between the company and its investors. They also prepare the prospectus, decide how much money to raise and when, and help the company price its issues.
What is a Prospectus?
A company going public in an IPO issues a formal document known as a prospectus to the Securities & Exchange Board of India (SEBI). This document offers detailed information about the company, including its financials, operations, risks, and the number of shares it plans to offer. This data helps potential investors make informed decisions. It also explains how the company plans to use the proceeds of the issue.
SEBI regulates the entire IPO market in India. It ensures transparency and compliance in the IPO process. There are multiple types of prospectus such as Draft Red Herring Prospectus (DHRP), shelf registration prospectus, etc.
3. Registration for IPO
The company and an investment bank prepare a registration statement and a Red Herring Prospectus (RHP). It is the most important document that a retail investor has access to. You can use the RHP to evaluate the offer. The document contains all the information about the company and its IPO, except the price or quantity of shares that will be offered.
4. Cooling-Off Period
This is the time when SEBI verifies the facts disclosed by the company. It looks for errors, omissions, and discrepancies. The company can set a date for the IPO only after SEBI approves the application.
4. Application to Stock Exchanges
The company submits an application to the stock exchange where it plans to list its shares. In India, a company can list its shares on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), or both.
5. Pricing
Two types of IPO pricing mechanisms exist – fixed price issues and book build issues. In a fixed price issue, the price at which shares will be sold and allocated is made known to the public in advance. Meanwhile, in a book-building issue, the issuer only reveals a range of prices (known as a price band). We will discuss more about both of these mechanisms.
6. Public Subscription
Once the company announces the IPO date, you can apply for it. Most brokers (like Zerodha, Groww, Fyers, etc.) offer the option to apply for IPOs from their terminals.
Additionally, you can apply for an IPO through the Application Supported by Blocked Amount (ASBA) option offered by banks. You can obtain IPO application forms from designated banks or brokers. Interested investors fill in the details in the form and submit it along with a cheque. SEBI has set five working days for the availability of IPO forms to the public.
7. Going Through With the IPO
After finalising the IPO, stakeholders and underwriters together determine the allocation of shares to investors. Typically, investors receive the entire requested amount of shares unless the IPO becomes oversubscribed. The allotted shares are then deposited into their Demat accounts, while refunds are issued in the event of oversubscription.
Following allocation, the company’s shares start trading in the stock market. The company must prevent insiders from trading to avoid manipulating IPO stock prices.
IPO shares are distributed to bidders within 10 days of the conclusion of the bidding period. In cases of oversubscription, shares are allocated proportionally among applicants. For instance, if the oversubscription is five times the available shares, an application for 10 lakh shares will only receive an allotment of 2 lakh shares.
Benefits & Drawbacks of IPO
The benefits and drawbacks of opting for an IPO are as follows:
Benefits
Drawbacks
IPOs offer a significant influx of capital for business expansion.
The IPO process involves huge expenses, including underwriting fees, legal costs, and compliance expenses.
Provide liquidity to early investors and employees, allowing them to cash out their shares.
Going public means giving up some control of the company as shareholders gain voting rights.
IPOs increase a company’s visibility and credibility in the market, attracting more investors and potential partners.
Public companies face rigorous reporting and compliance requirements, which can be time-consuming and expensive.
What is Oversubscription and Undersubscription?
Undersubscription occurs when the number of shares available for purchase exceeds the demand from investors. In this case, not all shares are allocated or sold, which means that the IPO may not achieve the intended capital-raising goal.
Oversubscription happens when the demand for shares surpasses the number of shares available. In such cases, shares are distributed based on predetermined criteria or proportion among applicants. Investors may receive fewer shares than they requested. Oversubscription can reflect high investor interest in the IPO and may lead to a successful capital raise for the company.
IPO Pricing Methods
There are two methods through which companies price their IPOs:
Fixed Price Issue
A Fixed Price Issue is a straightforward method for determining the initial share price in an IPO. In this approach, the company and its underwriters (entities that are responsible for assessing and assuming the risk of another party) decide a fixed price at which the IPO shares will be offered to the public. This predetermined price is typically based on various factors, including the company’s financial performance, market conditions, and valuation.
In a Fixed Price Issue, all shares are made available to the public at the same fixed price, irrespective of the level of demand from investors. This simplicity and predictability can be attractive to retail investors, as they know exactly what price they will pay for the shares in advance.
However, a drawback of this approach is that it might not effectively consider market dynamics, which could result in missed opportunities if the price is not set optimally. In cases of oversubscription, investors may receive a proportionate allotment based on their subscription amount.
Book Build Issue
A Book Build Issue offers a more flexible and demand-based approach to determining the IPO share price. Rather than fixing the price in advance, the company and its underwriters set a price range within which investors can bid for shares. This price range is known as a price band. It includes a floor (the minimum price) and a cap (the maximum price).
Institutional and retail investors then submit their bids, specifying both the number of shares and the price they are willing to pay within the defined range. The final offer price is determined by assessing the demand generated throughout the bidding process. It’s set in a way that ensures the sale of all available shares. This approach allows for real-time adjustments to the price, considering market demand and dynamics.
Investors who place bids at or above the final offer price usually receive the shares they requested, but those who bid below it may receive a partial allocation or none at all. Book Build Issues are generally seen as offering better price discovery because they take into account market feedback and adjust to investor sentiment and demand.
What is Lot Size in an IPO?
A “lot” refers to a specific quantity of shares that are offered for sale as a single unit in an IPO. The company going public and its underwriters determine the lot size. Investors who participate in the IPO can bid for and purchase shares in these predefined lots rather than selecting an arbitrary number of shares. The lot size may vary from one IPO to another. It ensures a fair distribution of the offering among investors.
Who are the Key Players in an IPO?
Various individuals and entities collaborate to ensure the successful execution of the IPO. The key players in an IPO are:
1. Company Management
The company’s top executives, including the CEO, CFO, and other key officers, are responsible for making strategic decisions regarding the IPO. They are actively involved in the planning, preparation, and execution of the offering.
2. Underwriters/Investment Banks
Investment banks serve as intermediaries between the company and the public markets. They help structure the IPO, conduct due diligence, market the shares to potential investors, and facilitate the pricing and distribution of the shares. They also underwrite the issue, which involves assuming the financial risk of purchasing the shares from the company and re-selling them to investors.
Investment banks help the company make strategic decisions related to the IPO, including the timing of the offering, the pricing of shares, and the overall financial strategy.
3. Legal Counsel
Legal advisors help the company navigate the complex regulatory and legal requirements associated with an IPO. They ensure compliance with securities laws and regulations, draft necessary legal documents, and provide guidance on disclosure obligations.
4. Accountants and Auditors
Accounting firms assist with financial reporting, auditing, and ensuring that the company’s financial statements comply with accounting standards. Independent auditors validate the company’s financial statements and ensure their accuracy. They offer confidence to potential investors regarding the company’s financial health.
5. Regulatory Agencies
In India, SEBI oversees the IPO process. SEBI reviews a company’s prospectus and other documents to ensure that the company discloses all necessary information accurately and meets regulatory requirements.
6. Investors
Institutional investors (e.g., mutual funds, pension funds) and retail investors participate in the IPO by purchasing shares. Their demand and interest in the offering play a significant role in determining the success of the IPO.
7. Stock Exchanges
The shares of a company are listed and traded on a stock exchange after the IPO. The exchange ensures that the company meets listing requirements and facilitates the trading process.
In conclusion, an IPO represents a significant milestone in a company’s journey, helping it raise capital, gain exposure, and become publicly traded. For investors, it offers opportunities to invest in exciting companies early in their public life. However, it’s essential to approach IPOs with careful consideration, conduct thorough research, and align your investment with your financial goals and risk tolerance!
NSE (National Stock Exchange) introduced trading in Treasury bills (T-bills) and State Development Loans (SDLs) in its capital market segment. In line with equity trading, investors can now buy and sellT-bills and SDLs through NSE trading members.
Most importantly, the move comes within a week of SEBI chairman Ajay Tyagi urging financial market participants to handhold those who have recently opened Demat accounts. They need to begin with investing in less-risky government securities before moving on to equities and other risky instruments, he said.
In order to understand what are Treasury bills and SDLs, kindly go through our next segment.
Treasury Bill
Firstly, treasury bills are used for short term borrowing by the Central Government to fund projects like building roads, schools etc. Furthermore, they are issued at three maturity periods–91 days, 182 days and 364 days. There is no interest component in the case of treasury bill, which is the main difference between a government bond and a treasury bill.
In other words, the bill is issued at a discount to its true value (which is higher than the discounted price) and at maturity the investor is given the true value of the bill. This is a simple case of buying low and selling high. It can be further explained through an example.
Let’s say, a 91-day treasury bill with a face value (true value) of Rs. 120 can be bought at a discounted price of Rs. 118.40. Upon maturity, the investor is eligible to receive the entire true value of Rs. 120, which allows them to realise a profit of Rs. 1.60.
As per the regulations put forward by the RBI, a minimum of Rs. 25,000 has to be invested by individuals willing to invest in a short term treasury bill. Furthermore, any higher investment has to be made in multiples of Rs. 25,000.
From an investor’s point of view, a treasury bill is an extremely safe investment option as it is issued by RBI and backed by the Central Government. So even during an economic crisis, the true value has to be paid to the investor upon maturity. In addition, they are highly liquid that means the true value will be deposited into the investor’s account a day after the maturity.
The current 91-day treasury bill yield is 3.22 per cent, in other words if the treasury bill would have been a government bond then its yearly interest rate will be 3.22 per cent.
State Development Loan (SDL)
State Development Loans (SDLs) are dated securities issued by states for meeting their borrowings requirements. Purpose of issuing State Development Loans is to meet the needs of state governments.
Lets first understand what is a dated security.
Dated Government securities are long term bonds of the government that carries a fixed interest rate. These are issued to fund state projects for rural and urban development
The key difference between SDL and Treasury Bill is that SDLs are long term investments having maturity periods up to 30 years and treasury bill has a maximum maturity period of a year.
The average interest (coupon) rate of a state development loan is around 8 per cent.
From an investor’s point of view, SDL is very safe government security for long term investment.
“Availability of a secondary market for these securities would encourage participation in the primary markets. Now all the major government securities including G-sec, SDL and T-bills are offered at NSE in both primary and secondary market platforms,” NSE Managing Director and CEO Vikram Limaye, said.
In conclusion, the availability of these securities in the capital market segment for trading, coupled with NSE’s wide reach, is likely to improve the participation of retail investors in this asset class.
