The Securities and Exchange Board of India (Sebi), which undertook a review of the market today, was assured by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) that they were monitoring the situation and exposures of brokers were below permissible limits and there was no evidence of concentration of positions.
During the review it was noted that in the last three months, 66 scrips out of more than 1,500 traded gained more than 50 per cent in their prices.
Out of these, the prices of first fifteen scrips had increased by more than 100 per cent. The turnover on September 3, 2001, was Rs 2,000 crore and has increased to Rs 4,600 crore on December 7.
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The executive director of BSE and managing director of NSE, who were present at the meeting, have assured Sebi that they are vigilant and are keeping close watch on market situation. Whenever necessary measures like imposition of special margins, imposition of additional margins and calling for advance pay-in, shifting of scrips to trade to trade settlement, reduction of price bands and de-activation of terminals are being taken.
The BSE executive director also told Sebi that presently special margin was levied on 56 scrips.
In NSE in the case of 600 scrips exposures have been assigned higher weightages to result into higher upfront margins. BSE has shifted 26 scrips to trade for trade settlement as a surveillance measure.
The exchanges also informed that there is comfortable cover of around 70 per cent of exposures in the form of additional capital and margin. Out of 70 per cent, the VaR (value at risk) margin and initial margin constitute 40 to 45 per cent.
On December 6, margin and additional capital of Rs 2180 crore was available against exposure of Rs 3403 crores on these two exchanges. It was also informed that margins were now being collected on client-wise gross positions and on VaR basis.
It was further intimated that broker wise exposures were below the permissible limits and were being constantly watched by the exchanges on line. Both the exchanges have reviewed concentration on broker level in scrips having larger volumes and price increase. It was intimated that no significant concentration was noticed for non institutional activities. In case of institutional activities all transactions have to compulsorily result into delivery.
Exchanges stated that markets continued to be safe and they were taking necessary measures to preserve the integrity of the market.
In the cash segment 99 per cent of the volumes are in Rolling Settlement wherein the trade is to be closed out by squaring up or else it results in compulsion delivery.