Sebi mulls trade quantity checks to minimise flash crash chances
According to two persons familiar with the development, the regulator is of the view that checks related to the price movement of shares are not sufficient to avoid a sudden crash in the indices and, so, there a need to have a cap on the order quantity as well. Bulk and block deals, however, would be exempted from such checks.
It is also believed that Sebi is not keen on disturbing the current system of ‘dynamic filters’ in the index stocks as it could have an impact on the derivative segment. Stocks that are not part of the derivative segment have fixed circuit limit ranging from 5% to 20%.
“Order quantity checks seem to be the only logical solution as any more restrictions related to price would disturb the market equilibrium,” said a person familiar with the development.
“While the price restrictions are dynamic in nature, the order check would most likely be static,” he said, on conditions of anonymity.
According to another person privy to the development, the regulator has arrived at this solution after analysing various global practices. “There is a common view that too much restrictions on the price movement impacts
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