Ajay Sujay Hanje, Pune
“Naked short-selling shall not be permitted in the Indian securities market and accordingly, all investors would be required to mandatorily honour their obligation of delivering the securities at the time of settlement. “said SEBI
SEBI’s recent move opens up short-selling to all investor categories, allowing them to borrow stocks for selling. However, they’ve wisely refrained from allowing naked short selling, a practice prohibited in the US and Europe due to its potential impact on market stability and integrity. It’s a measured step aimed at maintaining a balanced and secure trading environment in India’s markets.
Institutional investors, are organizations or companies that invest on behalf of their client. SEBI also said that institutional investor is not allowed to engage in day trading. All transaction made from institutional investor in bunches will be at a custodian level. Custodians will continue to settle their deliveries with stock exchanges on a net basis[AH1] .
F&O segment was traded in by the securities to allow short-selling. SEBI is showing indications that revaluate rooster stock available to make such transactions. According to the rules of SEBI institutional Investors must declare the whether the transaction was short sale when the order is being placed. On the other hand, Retail investors have choice to disclose the order or not, highlighted by SEBI.
SEBI has instructed the authorities in the stock exchanges to keep an eye and take action against the investor who didn’t provide securities during settlement. The SLB securities lending and borrowing scheme is going to be put in place to encourage short selling.
SEBI made a declaration that the execution of securities lending and borrowing will collide with implementation short selling by institutional investors.
Every broker in the stock exchange is morally required to collect information about the short-selling in detail and upload all the information on the stock exchange before the trading day is commenced. On the frequency of how the investor disclose their orders and investments may be reviewed periodically by the Security Exchange Board of India.