SEBI steps to curb stock market volatility to continue till Oct 29

The Securities and Exchange Board of India (SEBI) has extended, till October 29, the enforcement of regulatory measures aimed to contain market volatility amid the coronavirus pandemic. The measures, first introduced in March, include limits on positions that can be taken up by investors in the futures and options (F&O) segment.

"On review of the Covid-19 pandemic-related situation, it has been decided that the regulatory measures introduced vide SEBI Press Release dated March 20, 2020 shall continue to be in force till October 29, 2020," the markets regulator said in a statement.

It added that the stock exchanges and clearing corporations will be issuing the necessary instructions to the market participants in this regard.

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Last month, SEBI had announced the extension of the measures till September 24.

The March 20 circular said that for stocks in the F&O segment meeting the criterion of `average daily price high low` variation percentage (during the last 5 trading days) at more than or equal to 15 per cent, the market wide position limit (MWPL) may be revised to 50 per cent of the existing levels.

Furthermore, the regulator also set certain conditions under which mutual funds or foreign investors can place bets on the index futures.

The market regulator also mandated that short positions in index derivatives shall not exceed the holding of stocks by mutual funds, FPIs, trading members or clients.

Similarly, long positions in index derivatives shall not exceed the holding of cash, government securities, T-Bills and similar instruments by mutual funds, and FPIs, as per the measures announced in March.