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The Securities and Exchange Board of India (Sebi) has explained to the finance ministry that the markets are safe and it is taking necessary steps to check price rigging and market volatility. The move comes after the ministry made some inquiries about the state of the market.

Top level Sebi sources confirmed to Business Standard that the regulator had explained its position to the ministry following some questions raised by the government relating to the volatility in the market.

"These were not related to any specific issue, but were general questions relating to market safety. We have addressed those issues and informed the ministry about the steps", a Sebi official said.

 

Once again, familiar issues to check volatility have come back on the frontburner, like a possible ban on short sales, netting of long positions and margins and their proper collection. The expansion of the rolling settlement regime to more stocks is also an issue being discussed in this context. Regulatory officials in Sebi said the margining mechanism was under constant check and surveillance had been beefed up. The issue of a ban on short sales was under continuous discussion and the rolling settlement regime was a key issue agitating the mind of the regulator.

"We have told the ministry that the margins are working well, and other issues are being looked into", the official said.

Already, a Sebi committee is looking into the aspect of whether rolling settlement volumes can be improved by doing away with the circuit filter mechanism, in order to attract higher volumes in this segment. The issue was that the rolling settlement volumes had taken a beating for the stocks which had been put under that segment. The Sebi committee is examining whether doing away with circuit filters can bring back volumes.

Major moves are also being taken to carry forward the dematerialisation push at the bourses and thereby cleanse the bourses further. Sebi is also keeping a close watch on price rigging and movements at the major exchanges.

Even on the infotech, communications and entertainment (ICE) sector, Sebi is working on uniform valuation norms for dotcom companies which will serve as a benchmark for them to make IPOs.