May 29, 2008
Ashish Rukhaiyar
MUMBAI
IS this the right time to buy Reliance Power shares? Or should one wait for it to go ex-bonus? Retail investors seem to be in a fix as there have been conflicting views in the market over the “right” value of the shares. Reliance Power shares are currently trading at Rs 411.20 and has been under pressure over the last one week, shedding 7%.
Dealers tracking the counter say that retail investors have been selling shares of the Anil Ambani-controlled power utility, and hoping to buy it cheaper after it goes ex-bonus. Investors do not see any reason for holding onto the shares until June 2 (record date) to be eligible for the bonus shares that will be doled out to public shareholders in the ratio of 3:5 (three for every five held), they say. Because the difference between the total cost of five shares at the prevailing market price and that of eight shares at the likely ex-bonus price is insignificant.
Market experts who advise against holding Reliance Power shares have their maths ready. According to back-of-the-envelope calculations, the stock should be available at less than Rs 260 (Rs 257 to be precise) after going ex-bonus. This, they say, is after factoring in the 22.80 crore existing non-promoter shares and the 13.68 crore new shares that will make its way to the market.
Assuming that the shares list at Rs 260, an investor will have to shell out around Rs 2,080 for eight shares. At the current market price, five Reliance Power shares will cost him Rs 2,056 — these five shares will entitle him for three more shares. Not much of a difference. One can square off his position, buy other stocks and then buy back RPower after it goes ex-bonus.
In other words, there is no need to lock up capital in one stock. However, there are many who do not subscribe to this theory. Their biggest argument is that stock markets, and for that matter stock prices, rarely behave in the manner in which they are expected to.
Theory is miles away from practical, they add. They feel that the stock will zoom after going ex-bonus; their gut feeling is that the stock could rise to around Rs 280 ex-bonus.
Saturday 31 May 2008
Hall of shame: Shooting stars put Sebi, exchanges to test
Price Fixers Play New Games To Escape
The Glare Of Surveillance Agencies
May 24, 2008
Santosh Nair & Ashish Rukhaiyar
MUMBAI
IT APPEARS to be a busy season for stock manipulators. On Wednesday, KGN Industries soared to an unbelievable price of Rs 55,000 on relisting after nearly seven years. A day later, another obscure firm — Sylph Technologies — which last traded at Re 0.80 per share at the time of its delisting five years ago, climbed to an intra-day high of Rs 800 on relisting, before settling at Rs 200. The common thread running across these cases being, both these scrips figure in the Bombay Stock Exchange’s Z group — the exchange’s hall of shame for firms violating listing norms. Both these companies have no fundamentals worth mentioning.
While these scrips made headlines because of the bizarre price levels they touched on the relisting day, brokers claim that price fixing is a routine phenomenon in quite a few Z and T group stocks, where only delivery-based transactions are allowed due to a lack of liquidity.
“In many stocks, the shareholding pattern disclosed to the stock exchange is not what it appears to be,” said a broker. “Shares held under the heading of ‘corporate bodies’ are usually indirectly controlled by promoters, either through their own holding companies or those owned by close relatives,” he added. As a result, actual public holdings are very low, making the stock an easy target for price rigging.
Brokers claim there are quite a few listed companies that have no core activity other than providing fictitious profits and losses to investors, looking to balance their account books. And, while it is hard to prove, there are also whispers of corruption. As regulators step up vigilance, manipulators, too, have devised newer ways to dodge the law.
Circular trading is relatively easier for surveillance officials to detect. So, scamsters have given up on this route. Instead, they use a chain of clients who are often registered with different brokers. The difficult part for investigators then is to prove that the clients are known to each other.
“The exchange has a wealth of information, but is somehow not allowed to use it in the right way,” says an industry source, adding that “exchanges have become a just channel through which the regulator gets all the trading data.” Every week at the surveillance meet, Sebi officials ask exchange authorities to get trading data on stocks that are under their (Sebi) scanner. Exchanges provide the data, and their job is done, he added. There is an urgent need to allow exchanges to come out with orders on their own.
Interestingly, Sebi officials, on conditions of anonymity, accept that most of their time goes into handling petty complaints against brokers and they would be happy to let exchanges handle them. There are some who are afraid that exchanges might be biased, as brokers are also members of the exchange.
Sebi to tighten surveillance systems
THERE are many who feel that the exchanges are themselves to be blamed when petty issues make their way to the regulator’s office. “The exchanges have a tendency to escalate every issue to Sebi so that they are not pulled up in the future,” said an official.
It is believed that the regulator is working on a system where most complaints against brokers are resolved at the exchange level and the guilty is punished. “We have our integrated market surveillance system (IMSS) that we intend to use to uncover bigger wrong doings. The data and systems that exchanges have are enough to catch most of the small fish,” says a source.
A stock exchange is the first level regulator, and ideally should be able to handle complaints against brokermembers on its own. However, that is not the case in India as the regulator is believed to be against the idea of delegating or sharing power with other institutions.
It is also said that operators are able to gather courage to rig prices because stock exchanges in India do not have a rich history of bringing such entities to book, say sources. That job is handled by the market regulator, who has other issues also to tackle. In effect, penalising nuisance creators is a long process.
BSE is probing into Wednesday’s transactions in the KGN Industries stock. But key players behind the price swings appear to have succeeded in their plan, at least for the time being. On Friday, trading in the KGN stock were frozen at the lower end of the 5% intra-day circuit filter at Rs 4,863.27.
The Glare Of Surveillance Agencies
May 24, 2008
Santosh Nair & Ashish Rukhaiyar
MUMBAI
IT APPEARS to be a busy season for stock manipulators. On Wednesday, KGN Industries soared to an unbelievable price of Rs 55,000 on relisting after nearly seven years. A day later, another obscure firm — Sylph Technologies — which last traded at Re 0.80 per share at the time of its delisting five years ago, climbed to an intra-day high of Rs 800 on relisting, before settling at Rs 200. The common thread running across these cases being, both these scrips figure in the Bombay Stock Exchange’s Z group — the exchange’s hall of shame for firms violating listing norms. Both these companies have no fundamentals worth mentioning.
While these scrips made headlines because of the bizarre price levels they touched on the relisting day, brokers claim that price fixing is a routine phenomenon in quite a few Z and T group stocks, where only delivery-based transactions are allowed due to a lack of liquidity.
“In many stocks, the shareholding pattern disclosed to the stock exchange is not what it appears to be,” said a broker. “Shares held under the heading of ‘corporate bodies’ are usually indirectly controlled by promoters, either through their own holding companies or those owned by close relatives,” he added. As a result, actual public holdings are very low, making the stock an easy target for price rigging.
Brokers claim there are quite a few listed companies that have no core activity other than providing fictitious profits and losses to investors, looking to balance their account books. And, while it is hard to prove, there are also whispers of corruption. As regulators step up vigilance, manipulators, too, have devised newer ways to dodge the law.
Circular trading is relatively easier for surveillance officials to detect. So, scamsters have given up on this route. Instead, they use a chain of clients who are often registered with different brokers. The difficult part for investigators then is to prove that the clients are known to each other.
“The exchange has a wealth of information, but is somehow not allowed to use it in the right way,” says an industry source, adding that “exchanges have become a just channel through which the regulator gets all the trading data.” Every week at the surveillance meet, Sebi officials ask exchange authorities to get trading data on stocks that are under their (Sebi) scanner. Exchanges provide the data, and their job is done, he added. There is an urgent need to allow exchanges to come out with orders on their own.
Interestingly, Sebi officials, on conditions of anonymity, accept that most of their time goes into handling petty complaints against brokers and they would be happy to let exchanges handle them. There are some who are afraid that exchanges might be biased, as brokers are also members of the exchange.
Sebi to tighten surveillance systems
THERE are many who feel that the exchanges are themselves to be blamed when petty issues make their way to the regulator’s office. “The exchanges have a tendency to escalate every issue to Sebi so that they are not pulled up in the future,” said an official.
It is believed that the regulator is working on a system where most complaints against brokers are resolved at the exchange level and the guilty is punished. “We have our integrated market surveillance system (IMSS) that we intend to use to uncover bigger wrong doings. The data and systems that exchanges have are enough to catch most of the small fish,” says a source.
A stock exchange is the first level regulator, and ideally should be able to handle complaints against brokermembers on its own. However, that is not the case in India as the regulator is believed to be against the idea of delegating or sharing power with other institutions.
It is also said that operators are able to gather courage to rig prices because stock exchanges in India do not have a rich history of bringing such entities to book, say sources. That job is handled by the market regulator, who has other issues also to tackle. In effect, penalising nuisance creators is a long process.
BSE is probing into Wednesday’s transactions in the KGN Industries stock. But key players behind the price swings appear to have succeeded in their plan, at least for the time being. On Friday, trading in the KGN stock were frozen at the lower end of the 5% intra-day circuit filter at Rs 4,863.27.
Sensex futures off to a good start in US
May 22, 2008
Ashish Rukhaiyar & Shailesh Menon
MUMBAI
ALL attempts by the Bombay Stock Exchange so far to boost volumes in its equity derivatives segment have been a flop. But all may not be lost yet. There are signs of interest in Sensex futures, being traded on the US Futures Exchange, picking up. It is too early to say if the interest can sustain, but the development will certainly provide some solace to the shareholders and the top brass of BSE who are hoping for better valuations for the bourse ahead of its impending public issue.
Sensex futures made their debut on the USFE on April 4 this year. The initial response to the product was tepid, and trading volumes were abysmally low. But that now seems to be changing gradually. The number of traded contracts is increasing on a daily basis and there have been days when it has been in the range of 150-200 contracts.
According to Bloomberg data, Sensex futures on USFE witnessed activity for the first time on April 24 when 64 contracts were traded. This rose to 264 contracts on the very next day (April 25). There have been at least six trading sessions when more than 100 contracts were traded on a single day. The contracts have a notional value of $40,000 and a tick value of $10. The clearing and settlement is done through The Clearing Corporation, Chicago.
Experts attribute the trend to market makers that are trying hard to push up the volumes in the early stages so as to attract more players in the coming days. However, they add that it is difficult to predict the actual level of interest among investors.
“One reason for rising volumes in BSE futures could be because market makers are getting into the act to prop up volumes,” says Angel Broking derivative analyst Siddarth Bhamre. “This is evident from the fact that open interest positions on Sensex futures is very less compared to trading volumes. Though intraday trading volumes are high, no trader is really willing to carry forward the contracts,” he added.
Meanwhile, in an email response, a USFE spokesperson said they have “seen a wide range of market participants trading the Sensex contract (that include) market makers — small and large — to prop shops, investment firms and retail traders”. These Sensex futures offer overseas investors a slice of the action in India without actually getting registered in India with the regulator.
“There is great interest for locally-listed (Indian) instruments in overseas markets, a fact, that is very relevant from rising trading volumes of Sensex futures on the USFE,” said Gautam Chand of Instanex Capital. “If one looks at the trading pattern, Indian equity trading abroad is almost $15 billion per month compared to local FII trading of $32 billion per month. About 32% of value is traded outside India in the form of trades in GDRs, ADRs, futures and ETFs,” added Mr Chand.
There is also a section of market players that attributes the trend to Sebi’s decision of banning FIIs from issuing participatory note (PN) with equity derivatives as the underlying to their overseas clients. Incidentally, Singapore Stock Exchange (SGX) also reported a sudden spurt in trading volumes of Nifty futures after the Sebi diktat.
Ashish Rukhaiyar & Shailesh Menon
MUMBAI
ALL attempts by the Bombay Stock Exchange so far to boost volumes in its equity derivatives segment have been a flop. But all may not be lost yet. There are signs of interest in Sensex futures, being traded on the US Futures Exchange, picking up. It is too early to say if the interest can sustain, but the development will certainly provide some solace to the shareholders and the top brass of BSE who are hoping for better valuations for the bourse ahead of its impending public issue.
Sensex futures made their debut on the USFE on April 4 this year. The initial response to the product was tepid, and trading volumes were abysmally low. But that now seems to be changing gradually. The number of traded contracts is increasing on a daily basis and there have been days when it has been in the range of 150-200 contracts.
According to Bloomberg data, Sensex futures on USFE witnessed activity for the first time on April 24 when 64 contracts were traded. This rose to 264 contracts on the very next day (April 25). There have been at least six trading sessions when more than 100 contracts were traded on a single day. The contracts have a notional value of $40,000 and a tick value of $10. The clearing and settlement is done through The Clearing Corporation, Chicago.
Experts attribute the trend to market makers that are trying hard to push up the volumes in the early stages so as to attract more players in the coming days. However, they add that it is difficult to predict the actual level of interest among investors.
“One reason for rising volumes in BSE futures could be because market makers are getting into the act to prop up volumes,” says Angel Broking derivative analyst Siddarth Bhamre. “This is evident from the fact that open interest positions on Sensex futures is very less compared to trading volumes. Though intraday trading volumes are high, no trader is really willing to carry forward the contracts,” he added.
Meanwhile, in an email response, a USFE spokesperson said they have “seen a wide range of market participants trading the Sensex contract (that include) market makers — small and large — to prop shops, investment firms and retail traders”. These Sensex futures offer overseas investors a slice of the action in India without actually getting registered in India with the regulator.
“There is great interest for locally-listed (Indian) instruments in overseas markets, a fact, that is very relevant from rising trading volumes of Sensex futures on the USFE,” said Gautam Chand of Instanex Capital. “If one looks at the trading pattern, Indian equity trading abroad is almost $15 billion per month compared to local FII trading of $32 billion per month. About 32% of value is traded outside India in the form of trades in GDRs, ADRs, futures and ETFs,” added Mr Chand.
There is also a section of market players that attributes the trend to Sebi’s decision of banning FIIs from issuing participatory note (PN) with equity derivatives as the underlying to their overseas clients. Incidentally, Singapore Stock Exchange (SGX) also reported a sudden spurt in trading volumes of Nifty futures after the Sebi diktat.
BSE to tie up with I-Sec to launch bond index
May 09, 2008
Ashish Rukhaiyar
MUMBAI
BOMBAY Stock Exchange’s (BSE) search for a partner to launch a bond index is over. Asia’s oldest stock exchange is close to joining hands with ICICI Securities Primary Dealership — a subsidiary of ICICI Securities — to use its bond index. The move comes in the wake of capital markets regulator Sebi, asking both the premier stock exchanges to launch a bond index in its endeavour to change the predominantly OTC bond market to a screen-based one.
According to persons familiar with the development, the exchange has already indicated its willingness to use the bond dealer’s index named i-BEX that is used by many of the fund houses. “i-BEX was launched in 1994 and is being widely followed by most fund houses,” said a source who requested anonymity. “The decks have been cleared from the exchange side and issues like licensing fee and revenue sharing have also been sorted out. The deal should be sealed in the coming days”, he added.
The quantum of licensing fee could not be ascertained, though sources say that the exchange would probably have to shell out more than a few lakhs per annum for the index. BSE and ICICI Securities Primary Dealership would have an equal share of any income that the exchange earns while disseminating it.
i-BEX, which was launched in 1994, consists of an umbrella index covering the entire market and sub-indices catering to three contiguous maturity buckets. According to ICICI Securities’ website, “the three subindices are Si-Bex (1 to 3 years), Mi-Bex (3 to 7 years) and Li-Bex (more than 7 years)”. The indices measure the total and principal returns of the respective maturity segments and are updated daily. Incidentally, Association of Mutual Funds of India (AMFI) has been disseminating the i-BEX index via its website since 2002 onwards.
Interestingly, the deal should come as a big relief to the exchange as it was grappling with major hindrances like illiquidity and over the counter trading of the bond market. Constructing a bond index from scratch was the last thing that any exchange would want to do, say industry sources. As a matter of fact, there are hardly any bonds that boast of volumes enough to qualify as index constituents.
In a circular dated April 4, Sebi told stock exchanges to “construct a bond index (both corporate & GoI) and disseminate the same”. The regulator had then said the exchanges are free to decide whether they want to adopt any of the bond index computation models available globally or develop their own model.
Rating agency, Crisil, also constructs bond indices, but is only made available to its paid subscribers that include mutual fund houses and insurance companies. It designs those indices based on credit quality of securities, market feedback and actual trades. As per market buzz, the National Stock Exchange (NSE) is likely to use Crisil for its own bond index. Going ahead, Sebi also intends to introduce derivatives on bond index “based on experience gained and awareness generated”.
Ashish Rukhaiyar
MUMBAI
BOMBAY Stock Exchange’s (BSE) search for a partner to launch a bond index is over. Asia’s oldest stock exchange is close to joining hands with ICICI Securities Primary Dealership — a subsidiary of ICICI Securities — to use its bond index. The move comes in the wake of capital markets regulator Sebi, asking both the premier stock exchanges to launch a bond index in its endeavour to change the predominantly OTC bond market to a screen-based one.
According to persons familiar with the development, the exchange has already indicated its willingness to use the bond dealer’s index named i-BEX that is used by many of the fund houses. “i-BEX was launched in 1994 and is being widely followed by most fund houses,” said a source who requested anonymity. “The decks have been cleared from the exchange side and issues like licensing fee and revenue sharing have also been sorted out. The deal should be sealed in the coming days”, he added.
The quantum of licensing fee could not be ascertained, though sources say that the exchange would probably have to shell out more than a few lakhs per annum for the index. BSE and ICICI Securities Primary Dealership would have an equal share of any income that the exchange earns while disseminating it.
i-BEX, which was launched in 1994, consists of an umbrella index covering the entire market and sub-indices catering to three contiguous maturity buckets. According to ICICI Securities’ website, “the three subindices are Si-Bex (1 to 3 years), Mi-Bex (3 to 7 years) and Li-Bex (more than 7 years)”. The indices measure the total and principal returns of the respective maturity segments and are updated daily. Incidentally, Association of Mutual Funds of India (AMFI) has been disseminating the i-BEX index via its website since 2002 onwards.
Interestingly, the deal should come as a big relief to the exchange as it was grappling with major hindrances like illiquidity and over the counter trading of the bond market. Constructing a bond index from scratch was the last thing that any exchange would want to do, say industry sources. As a matter of fact, there are hardly any bonds that boast of volumes enough to qualify as index constituents.
In a circular dated April 4, Sebi told stock exchanges to “construct a bond index (both corporate & GoI) and disseminate the same”. The regulator had then said the exchanges are free to decide whether they want to adopt any of the bond index computation models available globally or develop their own model.
Rating agency, Crisil, also constructs bond indices, but is only made available to its paid subscribers that include mutual fund houses and insurance companies. It designs those indices based on credit quality of securities, market feedback and actual trades. As per market buzz, the National Stock Exchange (NSE) is likely to use Crisil for its own bond index. Going ahead, Sebi also intends to introduce derivatives on bond index “based on experience gained and awareness generated”.
Now, BSE stares at bleak futures
Cross-Margining May Drive More Traders To NSE,
Which Has A Strong Derivatives Market
May 07, 2008
Ashish Rukhaiyar
MUMBAI
THE already yawning gap in market share between the Bombay Stock Exchange — Asia’s oldest bourse — and its arch rival and number one bourse in the country, the National Stock Exchange, looks set to widen further in the coming days. Reason: the introduction of crossmargining facility between the cash and derivatives segments. Brokers are of the view that institutional investors will increasingly switch from BSE’s cash segment to NSE to avail of the benefits of cross-margining.
On Monday, Sebi gave the go ahead to cross-margining, under which an investor buying a stock in which he already has a short position in the futures segment will not have to pay the value-atrisk (VaR) margin twice over. Initially, the cross-margining benefit will be only available to institutional investors.
“The introduction of cross-margining has bought both cash and derivatives segment, into play simultaneously,” says a person familiar with the development, adding that institutional investors would be able to benefit from it only if all the transactions are through the same clearing house.
This means that institutional investors looking to avail of cross-margining benefits will now have to trade through only one exchange as India has two separate clearing houses for BSE and NSE. This will bring almost all the investors to NSE as BSE does not have a robust derivatives segment, say industry sources. This will come as a body blow to the Bombay Stock Exchange that is already fighting a losing battle with the NSE.
Data clearly shows that while BSE has not been able to attract investors to its derivatives segment, on the cash side too, it has been losing market share. During the start of the current calendar year, BSE’s share in the daily cash market turnover was around 35%, which has fallen to around 30% now. On some days, it was less than 25%.
Incidentally, not many countries that boast of a growing equity market have two different clearing houses. While NSE has its own clearing house (National Securities Clearing Corporation or NSCCL), BSE has tied up with Bank of India to form its clearing house.
The latest development has reignited the age-old debate on whether or not there is a need for two stock exchanges in the country, especially if both are offering the same set of services. Not many countries have two stock exchanges, two clearing houses and two depositories, point out industry experts. Why then should India be any different, they argue. But another section of players is equally emphatic that monopoly is not good for intermediaries and investors.
Incidentally, the recent past is flush with instances where regulators have merged two or more leading stock exchanges in the country to give birth to a large single stock exchange. In Indonesia, Jakarta Stock Exchange and Surabaya Stock Exchange were merged to form Indonesia Stock Exchange. Similarly, in Australia, the Australian Stock Exchange and SFE Corporation were merged in 2006 to form the ninth largest listed exchange.
Also, the Korea Exchange was established in January 2005 through the merger of Korea Stock Exchange, Kosdaq and Korea Futures Exchange. In USA, where both NYSE and Nasdaq operate, companies are not allowed to list on both the exchanges. It can list either on NYSE or on Nasdaq.
Which Has A Strong Derivatives Market
May 07, 2008
Ashish Rukhaiyar
MUMBAI
THE already yawning gap in market share between the Bombay Stock Exchange — Asia’s oldest bourse — and its arch rival and number one bourse in the country, the National Stock Exchange, looks set to widen further in the coming days. Reason: the introduction of crossmargining facility between the cash and derivatives segments. Brokers are of the view that institutional investors will increasingly switch from BSE’s cash segment to NSE to avail of the benefits of cross-margining.
On Monday, Sebi gave the go ahead to cross-margining, under which an investor buying a stock in which he already has a short position in the futures segment will not have to pay the value-atrisk (VaR) margin twice over. Initially, the cross-margining benefit will be only available to institutional investors.
“The introduction of cross-margining has bought both cash and derivatives segment, into play simultaneously,” says a person familiar with the development, adding that institutional investors would be able to benefit from it only if all the transactions are through the same clearing house.
This means that institutional investors looking to avail of cross-margining benefits will now have to trade through only one exchange as India has two separate clearing houses for BSE and NSE. This will bring almost all the investors to NSE as BSE does not have a robust derivatives segment, say industry sources. This will come as a body blow to the Bombay Stock Exchange that is already fighting a losing battle with the NSE.
Data clearly shows that while BSE has not been able to attract investors to its derivatives segment, on the cash side too, it has been losing market share. During the start of the current calendar year, BSE’s share in the daily cash market turnover was around 35%, which has fallen to around 30% now. On some days, it was less than 25%.
Incidentally, not many countries that boast of a growing equity market have two different clearing houses. While NSE has its own clearing house (National Securities Clearing Corporation or NSCCL), BSE has tied up with Bank of India to form its clearing house.
The latest development has reignited the age-old debate on whether or not there is a need for two stock exchanges in the country, especially if both are offering the same set of services. Not many countries have two stock exchanges, two clearing houses and two depositories, point out industry experts. Why then should India be any different, they argue. But another section of players is equally emphatic that monopoly is not good for intermediaries and investors.
Incidentally, the recent past is flush with instances where regulators have merged two or more leading stock exchanges in the country to give birth to a large single stock exchange. In Indonesia, Jakarta Stock Exchange and Surabaya Stock Exchange were merged to form Indonesia Stock Exchange. Similarly, in Australia, the Australian Stock Exchange and SFE Corporation were merged in 2006 to form the ninth largest listed exchange.
Also, the Korea Exchange was established in January 2005 through the merger of Korea Stock Exchange, Kosdaq and Korea Futures Exchange. In USA, where both NYSE and Nasdaq operate, companies are not allowed to list on both the exchanges. It can list either on NYSE or on Nasdaq.
Dow alleges IPR violation in Parsoli’s Islamic index
May 06, 2008
Shailesh Menon & Ashish Rukhaiyar
MUMBAI
GLOBAL investment indices provider Dow Jones Indexes has sent a legal notice to Parsoli Corporation, maker of the Parsoli Islamic Equity Index, alleging breach of intellectual property rights (IPR), amongst other things. The New York-based Dow Jones Indexes, has asked the Indian company to cough up $8,000 (Rs 3.2 lakh) to evade legal action.
Parsoli Corp is alleged to have “copied” text and methodologies from Dow Jones Islamic Market Index’s guidebook. The guidebook contains information on methodologies pertaining to structuring of the index.
“Our client (Dow Jones) has taken care to caution users of its website not to trample on their intellectual property rights. The user agreement makes it clear that the user of the site will use contents only for internal and non-commercial purpose,” says the legal notice (a copy of which is with ET).
The notice goes on to allege that the text under section “introduction”, “definition of index universe”, “screens for acceptable business activities”, “composition review dates and process” etc on parsoli.com have been “substantially and glaringly” copied from Dow Jones Indexes. “Your unauthorised reproduction is clearly unlawful as it infringes on our client’s copyright,” the legal notice adds.
“You are, by falsely claiming global presence, and unlawfully reproducing text from our client’s guidebook, are trying to indirectly imply that you have an affiliation with our client,” the notice said. Parsoli is also alleged to have made profits by advising clients on the back of methodologies developed by Dow Jones.
Parsoli has denied all allegations. “Parsoli clarifies that Dow Jones has in no way, set standards relating to Islamic financial institutions. The holy book Quran and Hadith have prescribed guidelines for investments for the entire Islamic community and your clients have not developed it on their own,” the lawyer’s notice on behalf of Parsoli said.
Shailesh Menon & Ashish Rukhaiyar
MUMBAI
GLOBAL investment indices provider Dow Jones Indexes has sent a legal notice to Parsoli Corporation, maker of the Parsoli Islamic Equity Index, alleging breach of intellectual property rights (IPR), amongst other things. The New York-based Dow Jones Indexes, has asked the Indian company to cough up $8,000 (Rs 3.2 lakh) to evade legal action.
Parsoli Corp is alleged to have “copied” text and methodologies from Dow Jones Islamic Market Index’s guidebook. The guidebook contains information on methodologies pertaining to structuring of the index.
“Our client (Dow Jones) has taken care to caution users of its website not to trample on their intellectual property rights. The user agreement makes it clear that the user of the site will use contents only for internal and non-commercial purpose,” says the legal notice (a copy of which is with ET).
The notice goes on to allege that the text under section “introduction”, “definition of index universe”, “screens for acceptable business activities”, “composition review dates and process” etc on parsoli.com have been “substantially and glaringly” copied from Dow Jones Indexes. “Your unauthorised reproduction is clearly unlawful as it infringes on our client’s copyright,” the legal notice adds.
“You are, by falsely claiming global presence, and unlawfully reproducing text from our client’s guidebook, are trying to indirectly imply that you have an affiliation with our client,” the notice said. Parsoli is also alleged to have made profits by advising clients on the back of methodologies developed by Dow Jones.
Parsoli has denied all allegations. “Parsoli clarifies that Dow Jones has in no way, set standards relating to Islamic financial institutions. The holy book Quran and Hadith have prescribed guidelines for investments for the entire Islamic community and your clients have not developed it on their own,” the lawyer’s notice on behalf of Parsoli said.
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