Sebi, stock exchanges beef up systems for Budget day trading

Markets regulator Sebi and stock exchanges have beefed up surveillance and risk management systems to handle eventualities that may arise from excessive volatility in the wake of Budget announcements.

The regulator has asked the exchanges, as well as clearing corporations and other market infrastructure entities to ensure enhanced vigil in the wake of the presentations of the Economic Survey on Tuesday and the Union Budget on February 1, sources said.

The surveillance and risk management systems have been reviewed minutely to tackle any eventuality arising out of any high volatility and to check any manipulative activities, sources said.

Besides, the regulator would keep coordinating with the Reserve Bank of India (RBI) and other institutions to ensure stability in the payment processes and other market activities.

In earlier years also on budget days as also on other important occasions, the regulator and exchanges have ensured an enhanced vigil even though the surveillance and risk management systems have been working well and have been as such made much stronger with passage of time, a senior official said.

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Incentives or schemes for farmers and rural India, women and social sectors like health and education may be cornerstone of the budget. Besides agriculture, the Finance Minister may announce schemes for boosting domestic manufacturing and promoting start-ups.

Tax experts and economists said the government may hike the service tax (currently at 15%) to align with the Goods and Services Tax (GST) regime.

In its budget proposal to the Finance Ministry, Sebi had recommended reducing the securities transaction tax (STT) on stock trading, sources said.

At present, all stock market transactions attract STT in the range of 0.017 to 0.125%. 

The regulator also suggested lowering the period of holding in respect of long-term debt fund units to 12 months from 36 months.

Besides, the regulator has sought an increase in the investment limit for tax-saving equity mutual fund schemes to Rs 2 lakh from the current Rs 1.5 lakh. These suggestions are aimed at attracting more investors.

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