MUMBAI, June 15: SEBI has slapped a fresh set of margins to avoid concentration of speculative interest in a few scrips. A margin of 10 per cent will have to paid if the carryforward position in any scrip exceeds 3 per cent of its share capital. In addition to this, a 5 per cent margin will be levied on excessive concentration of net outstanding positions on a single or few scrips in both cash and carryforward trades.The additional margins will come into effect from the next settlement onwards. All the margins will be collected in the form of cash, fixed deposit receipts and bank guarantees only.
Stock exchanges have also agreed to release daily data relating to the aggregate buy and sell value of trades for that day separately for domestic institutions and FIIs.
According to a statement issued by SEBI, the recent measures have been introduced to enhance the safety and integrity of the market. "The group noted that the present market trend and volatility in the Indian stock market is due to severalfactors such as increased FII sales, perception of the market about the current international events and continued turmoil in the Asian stock and currency markets. The group was overall satisfied with the safety of the Indian stock markets", stated the release.
As regards the carryforward margins, if at the end of the settlement, the carryforward position with respect to any scrip exceeds 3 per cent of the total paid up shares, a margin of 10 per cent will be levied for every increase of 1 per cent on incremental basis, over and above the existing carryforward margin of 10 per cent.
This would be applicable for both sales and purchase transactions. Once this margin is imposed by any one exchange, the other exchanges will also follow from the next settlement onwards.
"In the case of BPL it was seen that the total carryforward positions were in excess of 13 per cent of the paid up capital of the company. This is a dangerous situation as it can lead to massive price fluctuations", said a source.
Thesecond set of margins pertain to curbing concentration of positions in one stock. These are applicable to cash and carryforward positions. This margin will be calculated on the basis of net outstanding in each scrip, on the buy and sale side, at the end of each day.
Concentration margins will be triggered off if concentration in any one security is more than 50 per cent of a broker's total outstanding position or concentration in any two securities taken together is more than 65 per cent or concentration in any three securities taken together is more than 80 per cent. In any of these cases the additional margin will be 5 per cent.
"The idea is to ensure that a member spreads his exposure across all scrips so that there is no manipulation as well as he is not hurt badly if the scrip records an excessive fall," said a source.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
