BSE to launch function to prevent self trades in equities

The stock exchange plans to implement this from March 16, 2015

Leading stock exchange BSE today said it plans to introduce a new functionality in its equity segment to prevent self trades from March 16.

The self-trade prevention check functionality is being introduced with the purpose of preventing matching between a buy and a sell order entered in the same order book by a member for the same client code originating from same or different trading terminals of the member.

In a statement, BSE said that it plans to implement functionality, self trade prevention check, in its equity segment.

"BSE plans to implement this from Monday, March 16, 2015," it added.

Self-trades do not result in change of ownership as the buyer and the seller are the same. There has been an increase in such trades, with the aim of creating artificial volumes to manipulate prices.

Currently, there is no prohibition on self-trades -- they are not always fictitious in nature and are part of normal trading activity.

However, market regulator Sebi takes action against entities doing this with mala fide intent under its Prohibition of Fraudulent and Unfair Trade Practices regulations.

This new move is yet another step taken by the BSE to raise itself to the international standards and bring in more transparency.

Earlier, BSE had successfully launched its new functionality in the equity derivatives and currency derivatives segments.