NSE to introduce new facility to prevent self trade

To check self-trades, National Stock Exchange (NSE) today said it plans to introduce new facility in the equity, currency derivatives and Futures and Options segments.
The new facility will prevent matching between a buy and a sell order entered in the same order book by a member for the same client code originating from same or different trading terminals of the member.
In case an active order is likely to match with a passive order belonging to the same member and client code combination in the same order book, then such an order would be cancelled by the exchange, NSE said.

The facility would be applicable to non-institutional and proprietary orders, it added.
In three similar-worded circulars, the exchange said it proposes to introduce a new facility in the capital market, currency derivatives and Futures and Options segments for prevention of self trades.
It further said "implementation date for the same shall be communicated in due course of time."

Self-trades do not result in change of ownership as the buyer and the seller are the same. There has been an increase in such trades, with the aim of creating artificial volumes to manipulate prices.
Currently, there is no prohibition on self-trades - they are not always fictitious in nature and are part of normal trading activity.

However, market regulator Sebi takes action against entities doing this with mala fide intent under its Prohibition of Fraudulent and Unfair Trade Practices regulations.
Earlier in March, BSE had introduced a new functionality in its equity segment to prevent self-trades.