Sebi extends regulatory measures to curb volatility to October 29

Mumbai: The Securities and Exchange Board of India (Sebi) said on Friday all regulatory measures taken to curb volatility would be extended till October 29. Previously, such measures were extended up to September 24.

“On review of the Covid-19 pandemic-related situation, it has been decided that the regulatory measures introduced vide Sebi press release dated March 20, 2020 shall continue to be in force till October 29, 2020,” Sebi said in a press release.

On March 20, the markets regulator had imposed curbs on trading in futures and options to curtail frenzied activity that had contributed to a spike in volatility sparked by worries over the relentless spread of coronavirus.

Sebi had put a cap on the bearish bets that foreign investors, mutual funds and proprietary desks could take on index derivative contracts without owning the underlying shares. Sebi also made it expensive for these big-ticket investors to take bullish bets beyond a limit, while restricting trading in stock futures and options.

Foreign Portfolio Investors, mutual funds, proprietary desks and large traders could not take short positions in index derivatives above notional value of Rs500 crore unless they own the underlying stocks, the regulator had said.

To cut excessive speculation in stock futures and options, Sebi had cut the market wide positions limits (MWPL) in these contracts to 50 per cent in a phased manner. A market-wide position limit is the maximum outstanding positions allowed across all stock derivative contracts.

The new restriction was also applicable to those stocks which hit the market of 40 per cent or more in the previous five days.

For the stocks under 50 per cent MWPL, Sebi had also increased the minimum margin requirement in cash market. The new cash market minimum margin for these stocks was 20 per cent from March 23, 30 per cent from March 26 and 40 per cent from March 30.

For stocks that are not part of F&O with price band of 20 per cent and witnessing an intraday price movement of more than 10 per cent for 3 or more days in past 1 month , the minimum margin had been increased in a phased manner.