The Bombay Stock Exchange on Wednesday said there was no manipulation involved in the sell order of Reliance Industries shares on June 1 and the price decline was a result of a human error.

“After extensive review of trading of RIL during this episode by the BSE, we wish to inform the market that there does not appear to have been any manipulation involved in the scrip. The price decline was the result of a human error,” the BSE said in a statement here.

A large sell order of 1,60,000 RIL shares was entered in error, manually by a dealer of one of the BSE member firms with market as the order condition, rather than time-slicing the order into smaller orders as instructed by their client, BSE said.

Market orders are entered in the order book without any price and get matched with counter orders available in the order book at that point in time.

BSE said the prevailing market price at 12.50.24 pm on June 1 for RIL shares was Rs 1,027.55 per share. At the time the sell order for RIL shares was entered, there were a large quantity of buy orders in the order book. As the order was “at market” it swept through all the orders on the buy side.

As a ‘dummy’ circuit filter was set at the price of Rs 836.05 (20 per cent below previous day’s close) and the lowest priced buy-order in the order book was at Rs 840.55, it prevented price falling further and all the balance quantity was executed at the price of Rs 840.55. The execution of the entire order took approximately 12 seconds in 1,610 separate trades with 222 counter parties.

The BSE does have in place ‘dummy’ circuit filters of 20 per cent, even for scrips eligible for equity derivatives trading. Under the ‘dummy’ circuit filter logic, limit orders more than 20 per cent above or below the previous day’s closing price are rejected on order entry.

“This is the reason that there were no buy orders on the book below 20 per cent and the reason that the price did not fall more than 20 per cent below the previous day’s close, due to ‘dummy’ circuit filter,” BSE said.

Immediately, after the execution of this order at 12.50.36, the price of RIL scrip rebounded to Rs 999.50 on the BSE, it said. BSE trading systems worked properly during the sharp price decline and subsequent rebound and the “dummy” circuit filter worked to limit the price decline to less than 20 per cent, as it is designed to do.

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