10% Daily Price Band On All Ses

The Securities and Exchange Board of India has decided to impose a uniform intra-day price band of 10 per cent on all stock exchanges. This will be in addition to the 25 per cent weekly price cap followed by all the exchanges. The decision was taken at yesterdays meeting of the inter-exchange coordination committee.

A decision to settle all trades in the demat segment on a rolling settlement of T+5 was also taken at the meeting. This will be effective from January 15, 1998.

Other crucial decisions taken included the provision of a stop loss facility on all stock exchanges with online trading facilities. The National Stock Exchange has already implemented this system.

The upper limit for gross exposure of a bourses member-broker will be 20 times the base minimum and additional capital. Gross exposure is the aggregate of scrip-wise outstanding net purchases plus net sales. However, exchanges are free to set up stricter limits. This is in addition to the present capital adequacy and other margin requirements.

The position in respect to private placement of securities was also discussed at the meeting. It was decided that the listing of privately placed securities should not be permitted on bourses without observing disclosure and listing norms. A small working group consisting of representatives of stock exchanges, investor associations and other experts will be set up to suggest measures to improve the delivery business. The same group will work out modalities for privately placed securities.

The meeting also discussed the issue of reducing rumours. It was suggested that compliance officers should be designated by companies, who can be approached by the exchanges on an immediate basis. All A group companies on the Bombay Stock Exchange will be required to have such compliance officers.

In case of a breakdown in the online trading system, each of the exchanges will set up a standing committee. The exchanges will submit a report to Sebi and issue press releases specifying reasons for the breakdown.

Sebi also asked all the exchanges to periodically furnish the names of five companies and five share transfer agents against whom the maximum complaints are received for bad deliveries and delays in transfer. This will enable Sebi to take suitable action against the concerned companies and share transfer agents.

Risk management in case of multiple memberships was also suggested at the meeting. It was suggested that joint inspections should be conducted by officers of the concerned stock exchanges and information should be shared on a regular basis. The modalities for such joint inspections will be worked out by Sebi soon. Stock exchanges have expressed their strong reservations about the K R Chandratre panels recommendation to do away with the requirements for listing securities on the regional exchanges.

The determination of the right price for illiquid stocks will be done by a small group of BSE, NSE and Delhi Stock Exchange representatives, which will decide the base price for such stocks. With a view to ensuring correct disclosure of information to market participants, all actions taken by the disciplinary action committees will be put up on the notice board of the respective stock exchanges.

Coordination officers will be appointed at exchanges to exchange surveillance measures. The inter-exchange market surveillance group will consist of the BSE, NSE, DSE, Calcutta Stock Exchange, Ahmedabad Stock Exchange, Lucknow Stock Exchange and Bangalore Stock Exchange for 1998. The group is expected to meet once a month. The BSE will function as the convenor of the group throughout 1998 under the overall supervision of Sebi.