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Ministry for steps against rigging

Shaji Vikraman

NEW DELHI, May 28

THE Finance Ministry has taken up with the Securities and Exchange Board of India (SEBI) the issue of preventing rampant rigging of stock prices.

The Ministry has indicated to the capital markets regulator that strong action should be taken against ramping up of share prices and manipulation in the stock markets. The move has been prompted especially by the sharp price movements in the scrips of c ompanies whose financial performance has been ordinary or where it was driven up after quoting at low levels.

Although the regulator had warned the stock exchanges for not checking price manipulations in several scrips, the Ministry has suggested certain short-term and long-term measures which should be put in place to prevent such practices, according to offici als here.

These include among other things placing a ban on short sales, netting of long positions and extension of the rolling settlement mode to more scrips. The Government it appears is not willing to concede to the arguments against extending the rolling settl ement to A group scrips made by the regulator, the BSE and some market players. They were of the view that it would impact on liquidity and would result in lower volumes, a theory which the Ministry was not willing to buy, officials said.

The President of BSE, Mr. Anand Rathi had gone on record to say that if rolling settlement was implemented without the badla, liquidity would come down. According to him, on an average, the turnover in the rolling settlement stocks had dropped by 70 per cent.

The Finance Minister, Mr. Yashwant Sinha, who during the Parliamentary session said that the Indian stock markets were safe confessed last week that he was baffled by the movements in the market.