Short-selling to begin anytime: BSE chief

The Bombay Stock Exchange (BSE) is all prepared to roll out institutional short-selling and can do so "anytime", said Managing Director and Chief Executive Officer Rajnikant Patel.

Short-selling for institutions backed by the stock lending and borrowing mechanism was earlier scheduled to commence from February 1.

However, it has been delayed pending a clarification from the Central Board of Direct Taxes (CBDT) on tax treatment of stock lending and borrowing. "Clarification from CBDT has arrived and we are ready to start it (institutional short-selling) anytime," Patel said.

According to the CBDT circular, the profits from stock lending and borrowing are not subject to capital gains, as it does not lead to a transfer of securities.

Patel also added that BSE was closely monitoring the capital adequacy maintained by members for risk incurred by them.

The existing processes have displayed the strength during the recent volatility in the market, however, "We all must have an open mind for reassessing the system and procedures," Patel said.

He was speaking on the sidelines of a conference here after BSE acquired a 26 per cent stake in Ahmedabad-based National Multi-Commodity Exchange (NMCE).