Sebi to allow short sales by institutions

Securities Exchange Board of India (Sebi) today outlined a series of steps, including allowing short selling of equities by institutional investors, bringing mutual fund intermediaries under its purview and hiking position limits in derivatives market, to make Indian markets more attractive and safe.

Speaking at the 33rd national convention of company secretaries here, Sebi chairman M Damodaran said short selling by institutions would be allowed before the end of this calendar year.

"A dichotomy exists in india. We will remove that," he said, adding that other steps such as securities lending and borrowing and physical settlement of transactions, instead of cash settlement, would also be implemented simultaneously.

Damodaran said Sebi would also bring all mutual fund intermediaries, including agents and brokers, under its regulatory ambit to protect the interests of investors. Some mutual funds have already removed some agents from their list following the Sebi move, he added.

Sebi would also shorten the timeline for companies to raise funds from the domestic markets through the IPO route without "lowering the bar" or diluting the existing regulations, he said.

On the derivatives market, Damodaran said the position limit would be increased to make both futures and options popular. "There are prescribed position limits today that are at lower levels," he said.

Single stock futures has a become very popular instrument. "We are the largest single stock futures market in the world (on) the NSE. We are not leaving anything for those who want to write options," Damodaran said, adding this was the main reason for trading in options and index futures not picking up in India.