Thread by @Sac_Mahendra

(1/8) Scam 1992 Explained Simply:-

Harshad Mehta was a stock broker on BSE & was alleged to have engineered the BSE scam in 1992 using ready forward deals.#stockmarketcrash
#StockMarket #Budget2023 #banknifty #OptionsTrading #Singapore #Hedgefund $VRA $SNFTS #Wealth #Adani #BBC

(2/8)A ready forward refers to a short term, typically 15 day, secured interbank lending. In reality, the borrowing bank actually sells securities to the lending bank & then buys them back at the end of the loan period at a slightly higher price. #stockmarketcrash #banknifty #BBC

(3/8) A typical ready forward deal involves 2 banks brought together by a broker in a lieu of commission. As a part of the settlement process, the buyer & the seller need not even know eachother. #stockmarketcrash #StockMarket #Budget2023 #Adani #optiontrading #Wealth #singapore

(4/8) Although the broker is not supposed to have a proprietary position in either cash or securities, that was not the case in the lead up to the scam. #stockmarketcrash #StockMarket #banknifty #Budget2023 #optionsTrading $VRA #BBC #wealth #Hedgefund #Bank #Eygpt #Adani #USA #UK

(5/8) In this particular situation, the brokers could manage because they had become market makers & had started trading on their accounts. To keep up a semblance of legality, they pretended to be undertaking the transactions on behalf of a bank #stockmarketcrash #hedgefund #BBC

(6/8) They also used bank receipt (BR). In a ready-forward deal, securities were not moved back & forth in actuality. Instead the borrower i.e. the seller of securities, gave the buyer of the securities a BR. #stockmarketcrash #hedgefund #StockMarket #Adani #banknifty #singapore

(7/8) Harshad Mehta used banks that could issue fake BRs.Once these fake BRs were issued, they were passed on to other banks & the banks,in turn, gave money to mehta,obviously assuming that they're lending against government Securities. #stockmarketcrash #StockMarket #Budget2023

(8/8) This money was used to drive up the prices of stocks in the stock market.When the time came to return the money, shares were sold for a profit, the BRs were retired & money due to the bank was returned. #stockmarketcrash #Budget2023 #StockMarket #banknifty #singapore #Adani