Read full- http://t.co/mLm2Pi6x7b MUMBAI: TheNational Stock Exchangeis the premier stock exchange of the country but the crude strong arm tactics it uses to bury news that is unflattering to its image came as a rude shock. Mumbaiwalla had a first hand experience of how NSE flexes its PR machinery to quash negative stories â€“ and the extent itâ€™s willing to go to ensure that no journalist crosses the line. All is not well at NSE, especially after thestinging censure it got from market regulator Sebi last month. The matter pertained to an illegal lapseby the stock exchange â€“ it had failed to halt trading in its equity and derivative markets through a circuit filter even after the Nifty index on the bourse had breached the 10% lower circuit and then the 15% level. On October 5, 2012, a dealer at Emkay Global Finance had erroneously put in an order to sell a Nifty basket consisting each of the 50 index constituents worth Rs 950 crore. Within a few seconds of the order being put into the system, Nifty had crashed 16% before trading was stopped by the exchange. Sebi rule, however, stipulate that in case the index moves 10% on either sides, both NSE and BSE should stop trading for an hour in both equity and derivatives segments of the market. In case of a 15% crash, there should be a cooling off period of two hours. NSE MD Chitra Ramkrishna with Sebi Chief UK Sinha File pic of NSE MD Chitra Ramkrishna with Sebi Chief UK Sinha However, Sebi found that NSE had failed to bring a coordinated trading halt in all equity and equity derivative markets nationwide. In the process, NSE had violated Sebi rules and â€œput the securities market at a serious systemic riskâ€. Coming down hard on the NSE for the alarming lapse and breach of the law, Sebi even issued a directive for it to carry out a comprehensive review by an independent consultant â€“ of the processes followed, checks in place, systems employed by NSE â€“ not only in respect of the situation specific to this case, but also for maintaining stability of markets in general. MORE TROUBLE Even as this development was raising serious questions about the systems and procedures in place at NSE came word that the regulator had received acomplaint about the manner in which the bourse was doing its accounting! Mumbaiwalla learnt that the Bombay Stock Exchange had formally written to Sebi highlighting how the NSE could be in breach of the law again â€“ this time it wasa huge mismatchin the accounting entries of the NSE and itsfully owned subsidiary NSCCL amounting to almost Rs 400 crore. Stock MarketThe NSE, according to its publicly available accounts, provisioned for a transfer of Rs 474.22 crore towards NSCCLâ€™s SGF for the last financial year. The clearinghouse, however, has acknowledged only Rs 72.38 crore as a receivable, adding a note that a loss has been â€œappropriatedâ€ from NSEâ€™s contribution. BSE complained that both NSE and NSCCL were attempting to conceal losses on account of a defaulting member,Prime Broking. In its letter to Sebi, it said that NSE made the provisions evenbefore Sebi finalized the guidelinesfor such transfers. Accounting experts say there is a fundamental flaw in the way NSCCL has treated the receivable: â€œNSCCL cannot pick a number from a provision made by its parent entity to off-set its losses. Either it makes the full provision or just doesnâ€™t make anything at all.â€ While it effectively â€œmanagedâ€ most pink papers, the news was published by Mumbaiwalla, following which the NSE usedunwarranted pressure tactics to try and force the website to remove the story. â€˜MEDIA MANAGEMENTâ€™ What is intriguing is that NSE officials have beenopenly boastingabout dissuading theEconomic Timesas well asMintnot to carry the story. newspapersWhile NSE could have had every possible explanation or justification for what it did, its ability to force even such big media houses to completely drop news that an official complaint had been made against it to Sebi amply demonstrates the clout and good relations it enjoys with senior editors in these organisations. The day the story was published on Mumbaiwalla, we got an urgent call from a certain Girish Dikey. Introducing himself as a partner in PR agency Ketchum Sampark (which handles NSEâ€™s public relations), Dikey expressed his displeasure with the story. However, when Mumbaiwalla told him to send across an official comment or reaction from NSE and offered to incorporate into the story, Dike demurred said that it was â€œnot so simpleâ€ and that there were â€œmany nuancesâ€ to the matter. At his suggestion, a meeting was set up at the Ketchum Sampark office near GPO in South Mumbai that afternoon where a conference call was arranged with Divya Malik Lahiri, who heads the Corporate Communications department of NSE.