As you can see, in the above big trading firms like “GRAVITON RESEARCH” and other market participants always have the same number of buy and sell quantity at the same price.
If you look at the return, its pennies even for a retail trader. Therefore, I’m not buying the argument that they made both BUY and SELL transactions to make profit or other market making activities.
Can any person with real reason (not speculative answer) or insider tell why NSE or firms like GRAVITON RESEARCH show such reporting rather than a single directional buy/sell?
Where do you see the same price? For all the bulk transactions the prices are different. Also for one buy/sell bulk transaction there has to be one or multiple transactions of the same quantity.
If a certain bulk transaction is taking place at a certain price how can you label it as a directional buy/sell? Because for any buy/sell there has to be a counter sell/buy order of the same quantum. So if one large order is taking out the ask it’s buy or selling at the nearest bid it’s sell.
However if these same transactions are done over large no of trades and multiple no of trades they would not be labeled as bulk order.
Now from personal experience, here’s one of my bulk orders (its a penny stock)
Here only my orders are shown as bulk order because they were large chunks of order of 1L quantity each and the orders I took out are not shown as bulk orders because they would be from different quantities from different persons. Also the bulk order shown in the snapshot is not the actual order it is less than the actual quantity I traded on that day.
How can NSE or other firms do that if there are multiple bulk orders at multiple prices? Actual delivery quantity may be different than the bulk quantities traded at multiple price points. Also many trades don’t end on the bulk quantity page so you cannot say what the actual delivery quantity is as smaller trades at other price points are not captured.
As far as I understand, it doesnt matter if the order was chunked. As long a total quantity more 0.5% of market cap is traded, it needs to reported to exchange at EOD. For reference. click here
That’s fine. But I’m asking about regarding the reporting of quant firms like “Graviton” which doesnt make sense to me, as I pointed out in the original question!
The trade executed must result in delivery and shall not be squared off or reversed.
If you are asking from profit point of view then in most stocks (mostly out of nifty 50 or lesser known stocks) the bulk trades would just be a show to drive the volumes up. It would be a ruse to raise participation or help some one with large quantities get in or get out. There could be a lot of things at play and not just a few paisa loss or profit.
Yeah, I’m sorry. Upon digging further, it seems that the news article I referenced is incorrect. If you see go to source of truth, that is when SEBI mandated the disclosure rules for bulk deals, they mention nothing about delivery, just the total quantity. For reference:
Interestingly, no disclosure updates have been made to bulk deal reporting since then. This can be verified by the fact that there have been no new circulars realeased since then uptil now that amend the bulk deal definition or reporting in anyway.
In all the above, there is no mention of delivery. ANY trade greater than 0.5% of Market Cap of the company shall be reported. Hence, this proves the new article is incorrect.
Now coming to your second statement, the “lot of things at play” is what I’m wondering why big firms are doing this @tallerballer in his replies has highlighted this as well.
The same entity - Graviton Research Capital Llp is in question here.
Why are they buying and selling a security on the same day at the exact same price?
I found this explanation on quora, which kinda makes sense
"This is done to comply with the regulations that prevent price manipulation. In some conditions, internal transfers within a single broker/dealer must be printed to the tape.
Suppose your firm has offices in LA and NYC. You have dealers trading shares of ABC at both locations. They don’t work together, so one might accidentally sell to the other, which would be an illegal wash sale. To prevent that, you report to regulators that these are two separate offices and you have protections in place so that they cannot communicate. For compliance purposes, these two offices are now trading separate positions like two unrelated participants (which they are).
But your guy in LA likes to short things. You really do own the shares, so at the beginning of the day, you transfer 100k shares of ABC from your NY office to LA. The LA guy can then mark his sales (up to 100k) long, rather than short, making them exempt from short selling restrictions. Which makes sense because you do own the shares.
However, you are required to report this as a trade because you have to decide which office can sell them long. Remember, the offices cannot communicate. If they both see that the firm owns 100k shares and sell them, There are 100k shares worth of uncovered sells in the market.
But yesterday, the guy in LA was on vacation, so you transferred the same shares back to NY at the end of the day.
…And Legal told you to print those transfers to the tape as bulk crosses so no one ever accuses you of falsely implying there were real orders in the market.
…And Accounting told you to print them at the same price so the cash position would wash out on the back end."
Link: https://www.quora.com/Why-are-the-so-many-bulk-deals-reported-where-the-same-party-has-bought-and-then-sold-the-same-share-at-almost-the-same-price-quantity-Is-it-some-kind-of-stock-price-manipulation
Further some good points here:
"Here are some of the legal reasons why you may see this happening:
1. Arbitrage Efforts or Intraday trades: Some of these operations may be part of arbitrage strategies, where participants capitalize on price differences across various markets or exchanges. They might purchase shares at a lower price in one market and sell them at a higher price in another, aiming for profit.
2. Portfolio Adjustment: Entities like mutual funds or asset managers might execute these trades as part of their portfolio adjustment strategies. They realign their holdings to match their investment goals, possibly selling stocks to then buy them back for optimal asset distribution.
3. Adhering to Regulations: Transactions might be carried out to adhere to specific regulatory mandates or limits concerning share ownership in a company. An entity could sell shares to meet regulatory criteria and repurchase them once the regulations allow.
4. Enhancing Market Liquidity: Certain participants, such as market makers or high-frequency traders, undertake these trades to provide liquidity, helping to narrow the spread between buying and selling prices and improve market dynamics.
5. Managing Risks: To mitigate risks, traders and investors might buy shares to offset or hedge against their short positions or to safeguard against anticipated market movements.
6. Tax Strategy: Engaging in buying and selling activities could also be driven by tax strategies, such as selling shares to recognize losses for tax benefits, with plans to buy them back later."
