The tightened surveillance measures for stock markets, introduced on March 23 for a period of one month, have been extended until May 28.
In a statement on Monday, the Securities and Exchange Board of India (SEBI) said the stock markets are expected to remain volatile in the near future on account of COVID-19 pandemic and hence, the measures had to be extended.
“As the stock markets (both domestic and global) are expected to be volatile in the near future owing to concerns relating to COVID-19 pandemic and the resultant fear of economic slowdown, keeping in view the objective of ensuring orderly trading and settlement, effective risk management, price discovery and maintenance of market integrity, it has been decided that the measures implemented since March 23, 2020 will continue to be in force till May 28, 2020,” stated SEBI. On March 20, the capital markets regulator announced an increase in margins in the cash segment while tightening the norms for position limits in the derivatives market as volatility continued to surge.
As part of the measures, the so-called market-wide position limit in some stocks in the derivatives segment were revised to 50% and the penalty on an entity found to exceed the permissible limits was enhanced to 10 times the current minimum and five times the maximum penalty structure.
Meanwhile, foreign portfolio investors and mutual funds, among others, were allowed to take short positions in index derivatives only to the extent of the notional value of their holding in the underlying stocks.
