MAY 2: The current relaxation in the circuit filter system is a precursor to broader price bands. NSE deputy managing director Ravi Narain said that the four per cent relaxation in the curcuit limits were not enough in itself, and on its own was not expected to accomplish anything significant.However, the relaxations would lead to a regime of broader price bands so that scrips were not limited in their movements. Imposition of circuit limits was part of the risk management techniques being undertaken by Sebi to curb volatility on the bourses.
Narain said that imposing a limit on the the market as a whole - as happens in the case of Nasdaq - was not such a good idea as experience showed that the foreign markets have not been able to have much success with it in terms of containing volatility.
Stock Exchanges such as the BSE and NSE have been advocating broader price bands for scrips, while Sebi feels that the time is not ripe to introduce such relaxations.
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