Sebi may ask BSE to probe 120 million unconfirmed bid for Vedanta delisting

Mumbai: Who’s to blame for the Vedanta delisting failure? The management of the resources company and its bankers seem to believe technical glitches on the exchange platform did them in. But Asia’s oldest bourse differs.The spat has drawn Sebi’s attention, which is likely to ask BSE to verify the source of 120 million unconfirmed bids and whether the bids were genuine or there was any foul play as alleged by some shareholders. That caused wild swings in the stock price besides fueling confusion, according to people aware of the development.The bids on the Reverse Book Building (RBB) window from the institutional investors have to be confirmed by custodians after placing those bids and are kept in the unconfirmed window. It is possible that some bids remain unconfirmed due to technical reasons and are not considered for the purpose of determining the book.However, in this case, the quantum of 120 million unconfirmed bids until the end of the delisting closing period has stumped market analysts, and the quantity was significant enough to create a distorted market for bids and had a material impact on the stock price movement.Although the total bids received were around 1.37 billion, the demand schedule released by the BSE showed only 1.25 billion confirmed bids against the 1.34 billion shares required for successful delisting.Market participants have raised question marks over the purpose behind such unconfirmed quantity which has resulted in many shareholders getting trapped in the Vedanta counter.“Sebi should immediately probe those investors whose bids were not confirmed and whether these bids were backed by an adequate number of shares or whether these bidders had sold their shares in the open market,” said J N Gupta, founder, Stakeholder Empowerment Services. “The bids on RBB and the resultant statements from key stakeholders created a misleading picture of the entire situation. Whether this was a matter of mistake or a deliberate attempt to mislead is a matter of investigation.”Mails sent to Sebi, Vedanta Group and JP Morgan went unanswered.The confusion has resulted in giving a bad name to the entire delisting exercise, which is otherwise very transparent and process oriented, said an investment banker, who did not wish to be named.Earlier on Friday, Anil Agarwal, chairman of Vedanta Group, and some merchant bankers said that there were some technical glitches on the final day of bidding and sought extension for one more day.A BSE spokesperson said IBBS platform, the order entry system of BSE, worked throughout the day without any hitch and not a single complaint from any broker member was received on the functioning of the system. “The website of BSE only displays the data of the bids placed and is not a trading or order routing system nor it is directly connected to the trading system. Most times, people wrongly perceive the website as the trading system,” he said.According to another merchant banker, the BSE live screen was down most of the time and investors were unable to see the price discovery while some brokers were unable to place bids. “The RBB screen shouldn’t have shown the unconfirmed bids, which created a lot of confusion,” he said on the condition of anonymity.Responding to the allegations, the BSE spokesperson added that BSE’s Website display system slowness and non-response specifically for buyback area was observed and reported by the merchant bankers only for 90 minutes and later on again for a few minutes only during the entire bidding period. “However, that had no bearing on the IBBS system, which showed continuous order entry across the day without any stoppage,” he added.On the requests of the merchant bankers that several orders were pending to be routed into the system by various brokers, approval was given by Sebi to extend the time by 3.5 hours to 7 pm but the regulator did not give any further extension as very few orders came in to the system from 3.30 pm to 7 pm, said sources.

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