Make public top 10 brokers' names: Panel

The Securities and Exchange Board of India (Sebi) advisory committee on risk management has recommended that the names of the top ten brokers in the cash, derivatives market in terms of trading volumes in each scrip as well as proprietary trades should be publicly disclosed.

The committee has also recommended disclosure of the names of top ten trading members in terms of open interest in each security in the derivative market and the names of top 10 trading members in terms of proprietary trading open interest in each underlying in the derivatives markets.

According to a Sebi paper, which is up for comments, it was felt that such public disclosure would allow the market to detect attempts by a group of traders to ramp up a stock or to create a false liquidity in the stock.

The information would be disseminated with a time lag of seven days on a daily basis.

According to the recommendation, "This time lag would be sufficient to protect the confidentiality of the member position during the settlement process when the member may have to carry out lending/ borrowing activity to complete the settlement. It would prevent other traders from front running or trading against known positions of large traders. At the same time, this time lag is far smaller than the typical time taken for the regulator to complete any surveillance related investigation."

Further the aggregate trading of each category of investors in both the cash market and derivatives markets may then be disclosed to the market.

The information from both the cash and derivatives segments is expected to allow market players to "fathom manipulative strategies that straddle the two markets."

The committee has also mooted some more disclosures for foreign institutional investors. This includes segregating FIIs and their sub-accounts in various categories such as pension funds, insurance companies, mutual funds, other broad based funds, proprietary funds and others based on the information submitted by FIIs during their registration.

The members of the committee felt that this would allow the market to distinguish between different types of FII flows on the basis of their likely time horizons and the informativeness of their trades.

There were also suggestions that the information thrown up by the stock watch alerts system in the exchanges could be summarised and disseminated to the public in such a way so it gives them an idea of the trading patters in a scrip without compromising on the confidentiality of the brokers.