Sebi Likely To Slap Margins On Long Buying

The committee, which is meeting today, is debating the imposition of margins on long purchases to stabilise the market mechanism. A dull market could well mean a higher margin structure for short-sales to ensure that there can be no artificial depression of the market. While Sebi and the committee recognise the need for some checks on long purchases as well, the best option is to have a lower margin rate for such purchases in a dull market.

"Even the earlier BSE structure, when badla was permitted, had differential margins to suit the state of the market. In a bearish market, the margins on short-sales were higher and vice versa," a Sebi official explained, saying the same rationale could be followed by the Shah panel.

 

Sebi has also invited leading stockbrokers from the Bombay, Calcutta, Delhi and National stock exchanges to attend the Shah committee meeting.

It is felt that the presence of brokers would lend greater credibility to the decision and recommendations of the Shah committee.

In accordance with the Shah committee decision following its first meeting on November 27, the NSE, on its part, has already issued a circular to its members notifying that all members will have to declare at the time of order entry the short-sales position being undertaken by them.