A dealer keyed an order for Rs 48 crore instead of Rs 4.8 crore in a mid cap stock that trades Rs 30 crore a day, and the price rose 6% during execution. What does unwinding cost, who bears it, and which controls failed?

The error costs about Rs 1.80 crore, and the AMC bears it, not the scheme. About Rs 1.68 crore is lost buying the extra Rs 43.2 crore at Rs 103 and selling at about Rs 99, and about Rs 0.13 crore is the higher price paid on the intended order. Four controls failed: matching the ticket to the manager's order, a volume limit, a second approver for large orders, and a pause on a sharp price move.

Typing an extra zero on a bank transfer is a small slip with a big result, which is why banking apps ask you to confirm a payment ten times your usual size. An order of 160% of a stock's daily turnover is large enough to move the price on its own, so the error both bought ten times the shares and raised the price paid for all of them. The fund paid an average Rs 103 for shares that would have cost about Rs 100.3 had only the intended order gone in. The 6% rise is mostly the fund's own buying.

Split it into the two harms. The excess Rs 43.2 crore of shares was bought at an average Rs 103 and will be sold at about Rs 99, losing about 3.9% of it, Rs 1.68 crore. The intended Rs 4.8 crore also cost more, because it was filled inside the error's price spike: Rs 103 instead of about Rs 100.3, an extra Rs 0.13 crore. In total the error costs about Rs 1.80 crore, about 3 basis points of the fund. The unwind estimate is itself uncertain: selling at 20% of daily turnover takes about 7 trading days, and the price can move either way meanwhile.

The investors did nothing wrong, so they should not pay. Under the usual error-trade policy, the AMC moves the excess shares to its own error account, unwinds them there, and compensates the scheme for any loss, so the NAV is restored as if the error never happened. The intended order's extra cost is part of the same compensation. Many policies also say that if an error happens to make money, the gain stays with the scheme, so the AMC can never benefit from its own mistake. Check the AMC's written policy and the current regulatory expectations; the principle is that investors are made whole and the record shows how.

Four, each of which should have stopped the order alone. The order system did not compare the dealer's ticket with the fund manager's instruction. There was no hard limit on order size against daily turnover; a ticket above, say, 25% of a day should need an override. An order ten times the instruction and 160% of a day's volume passed with a single sign-off, which means the controls existed in name only. And nobody paused when the stock rose 6% under the fund's own buying. The fix list follows directly: automatic matching, volume and value limits, a second approver above a threshold, and real-time alerts on price moves during execution. Then test them by trying to push a bad order through.