Emkay's sell order took place in the cash market, which has an average daily volume of around Rs 15,000 crore.
Of this, delivery-based trading could be much less, at 50 per cent. This absence of depth is being cited as the main reason for the crash.
Emkay Global admitted its mistake, stating that "On October 5, while executing an order to transact a Nifty cash basket, in Nifty-50, a dealer committed a bona fide error. The error was in entering the value of the order as the quantity of Nifty-50 basket to be transacted. The order got transmitted to the NSE trading server as a single large Nifty basket order comprising of Nifty 50 stocks.
"Immediately on realising the error, we promptly got in touch with the NSE and kept in touch with them to co-ordinate all future course of action until the entire erroneous outstanding position was closed out," they added
BSE and NSE sources said the part-payment of the erroneous trading cost was made by Friday evening.
Market experts estimate the loss to the company at around Rs 70 crore – almost 50 per cent of its net worth as of March 2012 – on account of loss of value on shares sold and the penalty due to such transactions. Emkay’s share price plunged 10 per cent to hit the lower circuit and remained there all day to close at Rs 31.10 (market cap Rs 75 crore).
The company, founded in 1995 by two chartered accountants, Krishnakumar Karwa and Prakash Kacholia, is primarily engaged in the broking business and has a network of over 400 retail outlets across the country.