Sebi's timetable could have prevented market malfunctions

Mumbai, Ta. 13 March 2020, Friday

Securities and Exchange Board of India (SEBI), the stock market opinion, has failed to stop the erosion of Indian investors' capital using timely schedules as markets around the world have been collapsing as a result of coronaviruses. It has been argued that India, like China, would have banned short selling if such capital was not eroded.

In view of the events leading up to the global outbreak due to coronavirus, the reactions seen in the stock markets are natural. Other stock markets in the world, including India, have not reacted at all. Our government and regulators were not particularly ready to deal with the situation when the global stock markets were collapsing, ”said a well-known stockbroker.

This is a concern given that stock market players today took advantage of free entry and free exit in the market.

He prevented short-selling by estimating the situation arising in China after the outbreak of coronavirus and restricted the entry of traders into the market in addition to huge margins. He said China had prevented its investors' capital from eroding.

On the other hand, this is not the case in India and other countries. Investors in countries where there are no such measures are paying the price. Friday's sale was not fundamentals but sold out in panic. Sebi has wasted a lot of time and will further compound the crisis in the diluted market, said another stock broker. Sebi should still ban short selling. With the end of Lunar New Year holiday, China banned short-selling before the market could reopen. These measures have helped stabilize the market in China.

It is worth mentioning here that after the outbreak of coronavirus, the BSE Sensex Index has fallen by eight thousand points from its all-time high of 9.

Mechanisms must be applied to meet any adverse situation: SEBI

The stock exchanges and the Securities and Exchange Board of India (SEBI) are well equipped to deal with any adverse situation in the Indian stock markets and every necessary mechanism has been implemented, the SEBI said in a statement.

The SEBI statement came after today's recent upheaval in the stock market over the past few days. Compared to other countries in the world, such as Russia, Brazil, France, Germany, the UK and the US, the Indian stock market indices are relatively low.

SEBI and the stock exchanges have a strong risk management mechanism, which will be implemented automatically in case of heavy indices. However, the SEBI and the stock markets are ready to take further action if needed, ”the SEBI said in a statement. The currently implemented measures include VAR Margin, Extreme Loss Margin, Mark to Market Losses on a daily basis, Index and Circuit filters at the stock level etc.