The market regulators decision follows its inspection of the surveillance and monitoring mechanism of stock exchanges (SEs) where derivatives trading has been permitted.
A senior Sebi official told FE that after inspecting the The Stock Exchange, Mumbai (BSE), and the National Stock Exchange (NSE), Sebi found that both the bourses had fallen short of meeting certain accepted standards of surveillance and monitoring in some of the stocks approved for derivatives trading. Hence, as a measure of safeguard, SEs have been asked to put derivatives trading in these stocks on hold until further notice.
FE had reported on January 23, 2003, that Sebi was expected to prune the list of eligible stocks for derivatives trading.
The stocks, which have dropped from the list, include (common for both BSE and NSE) Geometric Software, Hinduja TMT, Hughes Software, KPIT, Rolta, United Phosphorous, VisualSoft.
Out of the additional nine stocks exclusively cleared for NSE, Bharat Earth Movers Ltd (BEML), CMC, Engineers India, Hexaware, Infotec Ent and Tata Elxsi have been dropped.
Finally the stocks in which derivatives trading has been allowed are: HCL Technologies, Hero Honda, IPCL, Mastek, NIIT, Polaris, Shipping Corporation of India (SCI), Wipro, ONGC, Bharat Electronics (BEL), ICICI Bank and National Aluminium (Nalco).
Earlier, the regulator had given the go-ahead to bourses to expand the list of eligible stocks for derivatives trading and had cleared 21 stocks common for both BSE and NSE. Ten additional stocks were cleared exclusively for NSE.
The stocks in which derivatives trading was put on hold in the first round included Aftek Infosys, Global Tele (GTL), Himachal Futuristic (HFCL), Software Solution (SSI) and Zee Tele, which were common to both BSE and NSE. Silverline Technologies was on the list of stocks exclusively cleared for NSE. Sebis move to clear the list of eligible list of stocks had created a controversy as the list had included some of the companies indicted by the Joint Parliamentary Committee (JPC) probing the stock market scam of 2001 and also where Sebis investigation was still on.
However, within 24 hours of its decision, Sebi had decided to keep JPC- indicted stocks away from the list.