The Securities and Exchange Board of India may soon reduce the criteria for short-and-splitting, knowing that people explained NDTV benefits. The proposal to reduce restrictions was approved in the final meeting of the Secondary Market Advisory Committee and may soon be followed with a draft circular.
Short-selling means to bet on the price fall of stock where you borrow a stock and sell it at the current price, and later buy it back at a low price and return it to the lender. However, if the price of the said stock increases instead, then the investor causes damage.
In 2007, the market watchdog came out with regulations for short-selling for the first time, and the criteria were repeated in January 2024.
SEBI’s 2024 circular clearly states that only the trading stocks in the futures and options segment are eligible for short-selling. This means that it is not allowed for shares outside the F&O segment until SEBI decides to review and expand the list of eligible stock.
A source directly mentioned for the case that after a circular of January 2024, the high-up in the broking industry faced some confusion and some brokers also started receiving notice from the regulator. Subsequently, the industry raised the issue for the regulator and discussed in the SBI Committee.
Another source mentioned the NDTV benefit that earlier all the stocks were not short-sailing and the industry wanted it more. Therefore, the recommendations to reduce the criteria were raised and approved in the committee, the person said.
Except for those in the trade-to-trade or T2T segment, all the stocks can pave the way for the expansion of small sales in all stocks, which are stocks where every trade should result in delivery, there is no place for intrade trading.
Institutional investors such as mutual funds will currently have to declare whether they are lower-baked, while retail investors should report their small selling by the end of the day.
SEBI can remove these requirements because the modern clearing and disposal system already tracks these transactions, the sources indicated.
Right now, if traders fail to distribute shares, they face 0.05% fine, and take action against stock exchange brokers. SEBI can remove the role of the exchange in enforcement and according to sources, allow corporations to be handled directly.
The proposed changes can simplify the process and reduce the regulator burden.
An email regulator seeking a response to this story was sent and any answer will be added to the story for the same.
(Tagstotransite) Securities and Exchange Board of India (T) Short Sailing
