The Securities and Exchange Board of India (SEBI) on Friday said that investors across all categories will be allowed for short selling, but naked short selling will not be permitted.
The market regulator also said all stocks that trade in the futures and options (F&O) segment are eligible for short-selling.
All investors would be required to mandatorily honour their obligation of delivering the securities at time of settlement, said SEBI.
No institutional investor shall be allowed to do day trading or square off their transactions intra-day, said the market regulator’s framework on short selling and securities lending and borrowing scheme.
Short selling means selling a stock that the seller does not own at the time of trade.
SEBI may review list of stocks eligible for short selling from time to time.
“The stock exchanges shall frame necessary uniform deterrent provisions and take appropriate action against the brokers for failure to deliver securities at the time of settlement which shall act as a sufficient deterrent against failure to deliver,” said the market regulator.
Introduction of a full-fledged securities lending & borrowing scheme (SLBM) shall be simultaneous with the introduction of short-selling by institutional investors, said SEBI.
Institutional investors have to confirm and inform upfront if the trade is a short sale while retail investors can make necessary disclosures by end of the trading hours. Brokers have been mandated to collect scrip-wise short sell positions and upload on exchanges before next trading day.
“The brokers shall be mandated to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day. The stock exchanges shall then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis. The frequency of such disclosure may be reviewed from time to time with the approval of SEBI,” said the market regulator.
Institutional investors have to confirm and inform upfront if the trade is a short sale while retail investors can make necessary disclosures by end of the trading hours.
Brokers have been mandated to collect scrip-wise short sell positions and upload on exchanges before next trading day.
“The brokers shall be mandated to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day.
The stock exchanges shall then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis.
The frequency of such disclosure may be reviewed from time to time with the approval of SEBI,” said SEBI.
