Measures to contain high volatility in market to be in force till July 30: Sebi

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Published: June 19, 2020 3:50 AM

The markets regulator, in its statement, said that it had reviewed the current Covid-19 pandemic situation and had taken the decision in accordance with it.

After the regulator announced its decision to extend the volatility curbs till July 30, it stated that clearing corporations and stock exchanges would be issuing the necessary instructions.After the regulator announced its decision to extend the volatility curbs till July 30, it stated that clearing corporations and stock exchanges would be issuing the necessary instructions.

The Securities and Exchange Board of India (Sebi) on Thursday announced that the volatility curbs that the regulator had introduced back in March would remain till July 30, 2020. The markets regulator had introduced these norms in light of the rising volatility in the market amid the Covid-19 pandemic in March.

The markets regulator, in its statement, said that it had reviewed the current Covid-19 pandemic situation and had taken the decision in accordance with it. “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 July 30, 2020,” the regulator said. This is the third time that Sebi has extended the measures it had introduced to curb volatility in the markets.

On March 20, the regulator had decided that mutual funds, foreign portfolio investors, trading members (proprietary) and clients can take positions in the index derivatives provided that short positions in the index derivatives do not exceed in notional value the holding of stocks. On the other hand, the long position could not exceed the notional value to holding of cash, government securities, T-bills and other instruments.

Additionally, Sebi had hiked the margins by 50% for futures and options (F&O) stocks whose price movement was equal to or more than 15% as well as for stocks with a market wide position limit (MWPL) utilisation percentage of more than 40%. The regulator had introduced a cooling period of 15 minutes for stocks that hit a certain price band in derivatives before releasing it. Sebi had also hiked the cash market margins of certain non F&O stocks.

After the regulator announced its decision to extend the volatility curbs till July 30, it stated that clearing corporations and stock exchanges would be issuing the necessary instructions. “The stock exchanges and clearing corporations will be issuing necessary instructions to the market participants in this regard,” said Sebi in its statement.

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