Many stock brokers have raised their insurance coverage to up to 10 crore and extended their mandatory broker indemnity policy to cover fat finger errors similar to the one that caused Mumbai-based brokerage Emkay to take a Rs 51-crore hit on its books.
Emkay GlobalBSE -6.17 % received only Rs 95 lakh as insurance against the loss of Rs 51 crore suffered because one of its dealers punched in an erroneous trade last year. The brokerage had an insurance cover of only Rs 1 crore to cover trading errors.
Brokers says prior to the Emkay incident, trading members bought only traditional indemnity policies that did not provide cover for punching errors.
According to Sebi’s exchange regulations, it is mandatory for every stock broker to have a minimum professional indemnity insurance of Rs 5 lakh.
Courtesy: Economic Times