SEBI Strengthens Rules On Short-Selling
Securities and Exchange Board of India (SEBI) has introduced a new requirement for institutional investors: they must disclose whether a proposed transaction involves a short sale upfront, aiming to minimise market volatility. Retail investors, on the other hand, have the option to make a similar disclosure by the end of the trading day.
Short-selling, which involves selling stocks the seller doesn't own at the time of trade, is a practice allowed for both retail and institutional investors. However, this new directive from SEBI seeks to bring more transparency to such transactions.
The regulatory body has made specific alterations to norms concerning short-selling within the market. Brokers are now mandated to gather details on short-sell positions for individual stocks, compile this data and submit it to stock exchanges before the start of trading on the following trading day.
Additionally, stock exchanges are required to consolidate this information and publish it on their websites weekly, offering the public access to these insights into short-selling activities. This move is intended to enhance transparency and provide more information about short-sale positions to the wider market audience.
