SEBI to lift ban on short sales, stock lending

MUMBAI, MAY 2. The Securities and Exchange Board of India is to lift the ban on short sales and stock lending from July 2, coinciding with the introduction of rolling settlement across exchanges in the country.

``Keeping in view the introduction of rolling settlement in July, the ban on the sale not backed by purchase order for the same scrip will be lifted on July 2,'' the SEBI member, Mr. J. R. Verma, told reporters after a meeting of the risk management group here today.

The stock-based lending would also be permitted from July 2, he said, adding restrictions were not necessary when the rolling settlement was made operational.

Markets are showing signs of stabilisation and steps were taken for the benefit of the market, the SEBI Chairman, Mr. D. R. Mehta, said.

Investors would be required to provide their permanent account number (PAN) for giving them unique identity across brokers and exchanges for deals exceeding Rs. 1 lakh, Mr. Verma said.

This rule would come into force from August 1 and brokers would transfer client ID data to exchanges, he said adding ``it will help track deals for vigilance.''

Client identification would also aid risk monitoring and help track top ten positions of the investors, he added.

Restrictions on the short sale, including ban on stock lending were imposed keeping in mind the `extraordinary circumstances,' SEBI sources said, adding the volatility and bearish trends that prevailed in March `are no longer visible now and are unlikely to be there a few months later.''

``Measures such as ban cannot remain in place for long and we chose July 2 as an appropriate date as markets will move to the rolling settlement,'' they said.

In a move to contain volatility in a falling market SEBI had imposed a temporary ban on March 7 on short sales for scrips in the ALBM, BLESS and modified carry forward systems (MCFs).

All sales had to result in delivery unless the sale position is preceded by purchase of same value of the same scrip in the same name for two weeks.

- PTI

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