KARACHI, Nov 20: The Karachi Stock Exchange (KSE) index of 100 shares stood misrepresented till mid-day on Monday due to what the bourse termed a “human error”. The monitors showed index to have plunged by around 230 points, but if it were not for the error, the actual fall was 300 points.

In a press release issued in the evening, the bourse tried to explain what had gone wrong. It stated that M/S Arif Habib Securities Limited (AHSL), a component of KSE-100 index, had announced Bonus @122.2222% at the time of sending their financial results for the quarter ended September 30, 2006. The book closure for determination of the entitlement of that bonus issue was notified from November 20 to November 26, 2006.

Accordingly, the scrip was to trade on ex-bonus basis from Monday i.e., November 20, 2006. Ex-bonus price of the scrip on the basis of the 122.2222% bonus should have been Rs243. “But due to human error, a mistake was made in the calculation of ex-bonus price of the scrip, which after adjustment of the bonus, was calculated at Rs441.82 instead of Rs243,” the bourse stated.

It further mentioned that the trading started with this incorrect price of Rs441.82 at 9.45am and continued for about 5 minutes. During this period 153 trades were recorded in this scrip. However, when the error was identified, trading in the scrip was immediately suspended in order to avoid further trading with incorrect price.

The trading in the scrip remained suspended for about one and half hours and it was thereafter resumed on the basis of correct bonus adjusted price of Rs243, the KSE said and concluded: “However, as the mistake was rectified during the trading hours, the impact of this computation mistake had already been absorbed by the index at the close”.

The seemingly small issue raises several concerns, foremost of which is the curiosity whether the price adjustment at the Exchange is still carried out by staff working on calculators and not automatically fed in the IT programming? In the latter case, the blame should not be placed on a ‘human error’, but an inefficient technology.

Investors also question about the fate of 153 trades in AHSL that took place on the wrong price quotation of the scrip. And finally, no one would be able to figure out how many investors would have held back their sale or purchase orders if the real fall of the index had stared them in the face.

The AHSL stock itself plunged by Rs12 to close at Rs231 on an exceedingly dismal day when every two of the three shares that came up for trading lost value.