COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

SEBI bans short sales to arrest Sensex fall

Alarmed by the fall in the country's premier stock exchanges, the Securities and Exchange Board of India has banned short sales.

Considering that the regulatory authority is resorting to the measure after nearly six years -- the last occasion was at the height of the securities scam of 1992 -- shows the gravity of the situation.

The SEBI has also directed stock exchanges that net outstanding sales position at the end of any trading day in each security must result in delivery, effective June 17, 1998.

For carry forward business, 50 per cent of the outstanding short sale positions at the end of trading will be squared up in the current settlement and the balance carried forward to the next settlement cycle.

A SEBI statement said the new measures were temporary and would be reviewed shortly.

These measures will, however, not be applicable for securities which are in ''no delivery'' period.

The capital markets regulator said the measures would not affect the trades of domestic or foreign institutions as they trade on a delivery basis.

Stock exchanges have been advised to keep a close watch on the outstanding positions and levy special margins in additions to the normal margins.

The SEBI also issued a circular laying down the regulatory framework for derivatives trading in India based on the recommendations of the Dr L C Gupta committee.

However, the derivatives trading could commence only after the necessary amendments to the Securities Contracts (Regulation ) Act are made to enable derivatives instruments to be treated as 'securities', the statement said.

UNI