Stricter surveillance measures to tackle market volatility to be in force until October 29


Capital markets regulator Sebi on September 18 said it has decided to keep in place measures to deal with market volatility till October 29 after reviewing the pandemic-related situation. In the wake of the COVID-19 pandemic, the watchdog had in March came out with various measures, including revision of market-wide position limits, to ensure orderly trading and settlement to contain high market volatility.

Besides ensuring orderly trading and settlement, these steps were aimed at effective risk management, price discovery and maintenance of market integrity.

“On review of the COVID-19 pandemic related situation, it has been decided that the regulatory measures introduced vide Sebi press release dated March 20, 2020, shall continue to be in force till October 29,” the regulator said in a release on Friday.

The stock exchanges and clearing corporations will be issuing necessary instructions to market participants in this regard, it added. For stocks in F&O segment meeting certain criteria, market wide position limit was revised to 50 per cent of the existing levels as part of the measures announced in March.

Further, margin for stocks meeting specific criteria was increased, while position limits in equity index derivatives (futures and options) were revised. Dynamic price bands for F&O stocks can be flexed only after a cooling-off period of 15 minutes from the time of meeting the existing criteria specified by stock exchanges for flexing, Sebi had said.

Increase in margin for non-F&O stocks in cash market was also announced subject to certain conditions. The measures were also aimed at limiting short-selling of shares as well as reduce volatility in individual stocks. All these measures had come into force from March 23.

Written by Rakesh Sashmal