What was the badla system: WEEKEND READ | Badla: The rise and ruin of an infamous stock market system
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Synopsis As new restrictions to curb excessive speculation are placed on F&Os, does anyone even remember their precursor? For decades, it was the “Badla” system that fuelled our stock markets, offering traders a way to carry forward trades without upfront payments. While it injected liquidity and amplified profits, Badla also sparked speculation and manipulation because, at its peak, it dominated over 70% of the BSE’s trading volume. But over-leverage and opaque dealings led to volatility and financial crises. In 2001, regulators finally pulled the plug on Badla, forever changing the trading landscape. A look back at a system whose legacy has shaped modern market regulations. The term "Badla”, meaning "carry forward" or "change" in Hindi, perfectly describes this trading practice. Introduced in the BSE, it functioned as a deferred settlement mechanism, allowing investors to roll over trades instead of making i...