SEBI is likely to withdraw its measures to curb market turmoil

Mumbai, Ta. 24 August 2020, Monday

The Securities and Exchange Board of India (SEBI), the regulator of the capital market, is likely to review the measures taken on March 30, 2020 to curb volatility in the market by the end of this month. With the market volatility index now hovering at 40 and it is at a normal level, SEBI is likely to remove the measure.

It may be mentioned that when the Kovid-12 epidemic started spreading in March, the market was in a state of panic. At that time, the regulator of capital and commodity markets, Sebi, had announced measures to curb market volatility, making it difficult for short selling in stocks.

These measures came into effect on March 4 and are now likely to end on August 4. One of the steps taken by SEBI at that time was to review the market wide position limit, the other was to increase the market wide position limit for stocks to 50 per cent with criteria in the F&O segment.

Third, the daily average high-low price difference percentage during the last five days should be more than 15% or so or the average MWPL utilization percentage should be more than 50% or so during the last five days.

In case the MWPL utilization in securities exceeds 5%, the derivatives contracts will come under ban and all customer-trading members will be required to trade in these scrips in derivatives contracts and offset their position.

Any increase in open position will require the necessary panel or disciplinary action to be taken by the stock exchange or clearing corporations. SEBI has gradually increased margins for F&O and non-F&O cash market stocks to a minimum of 30 per cent.