Ses In The Dark About Filters

Stock exchanges (SEs) are still awaiting the Securities and Exchange Board of India's (Sebi) communication on the fate of circuit filters on stocks with just two working days left for introduction of rolling and uniform settlements.

According to sources at the Bombay Stock Exchange, "There is no communication from the Sebi about the circuit filter on individual stocks. There is only one Sebi press release to refer to this, but it is not sufficient to implement any definite action about it."

At a meeting of Sebi's sub-group on risk management systems for equity markets on May 31, it was suggested that there be individual scrip-wise price bands of 20 per cent either way, for all scrips in the compulsory rolling settlement except for scrips on which derivatives products are available or scrips. This included indices on which derivatives products are available.

However, the release also states that this recommendation would need the approval of Sebi board, which had earlier decided to remove price bands completely in rolling settlement.

For scrips that are not under compulsory rolling settlement, the existing price bands would continue, it said.

The Sebi board has not met since the go-ahead to this recommendation, thus leaving the exchanges in a quandary.

The bourses are likely to take a decision over the weekend following international best practices, if the Sebi's directive does not reach in time.

Meanwhile, the exchanges may continue with market-wide circuit breakers as suggested by the sub-group. The sub-group had suggested that with regard to implementing an index based market wide circuit breaker, it was decided that these will apply at three stages of the index movement either way at 10 per cent, 15 per cent and 20 per cent.

These circuit breakers will bring about a coordinated halt trading in all equity and equity derivative markets nationwide.

The market wide circuit breakers would be triggered by movement of either BSE Sensex or the NSE S&P CNX Nifty whichever is breached earlier, the sub-group said.