Sebi Calls Se Surveillance Meet On Friday

The meeting will discuss a host of crucial issues, ranging from the systemic issues to be addressed in tightening the surveillance systems and preventive measures which can be taken to minimise such defaults. The other important point on the agenda would be the discussion on the StockWatch system of surveillance in the United States and its applicability in the Indian markets.

The depressed market conditions have taken a heavy toll on the stockbroking community, with some Mumbai brokers facing payment problems. The Bombay Stock Exchange last week declared broker Shailesh Bajaj as a defaulter after trying its best to save the situation.

 

According to L K Singhvi, senior executive director, Sebi, the meeting would be attended by the BSE, National Stock Exchange, and the Delhi, Madras and Calcutta stock exchanges. Ahmedabad Stock Exchange and Vadodara Stock Exchange have been called as invitees to the meeting. Sebi has been activated to proceed quickly on taking stock of the existing surveillance systems at the bourses in the wake of the BSE default. Sebi and BSE officials discussed the systemic factors which have to be addressed to check the recurrence of such instances.

We will discuss the various ways of monitoring the situation. Early detection systems and possibilities of minimising defaults would also be discussed, Singhvi said.

According to Sebi, preventive measures could include further tightening of the margins system and imposing trading limits on trouble prone stocks. BSE, it may be recalled, has already taken similar steps immediately upon the default, beginning Monday, when it slapped limits on the B2 group stocks and tightened the margin payment procedure for the A and B1 groups as well. The exchange would also revamp the B1 and B2 groups of stocks to make the B2 group a buyer beware list.

It is also important to understand at what stage such occurrences can be detected and checked, Singhvi said. The other important point of discussion would be to look at the problems backwards to understand whether the existing systems did throw up the necessary signals indicating that a crisis was in the offing. The meeting would then seek to find out whether the exchange authorities failed to notice such signals or whether something more needed to be done.

A thorough review of the existing surveillance systems and its upgradation would also be on the agenda. Besides, the meeting would also discuss the issue of a coordinated approach between stock exchanges in times of unusual market volatility. The Inter-exchange Surveillance Group, an offshoot of the Inter-exchange Coordination Group (ICG) of stock exchanges, was set up at the last meeting of the ICG to address common issues of surveillance.