F&O stocks to be eligible for short-sale

All the159 stocks currently available for derivatives trading will become eligible for the proposed short-selling of stocks in the first phase, Securities and Exchange Board of India (Sebi) Chairman M Damodaran said on Wednesday.

In a rare press conference, Damodaran also talked on various other issues ranging from hedge funds to IPO grading and real estate mutual funds. Excerpts from the press conference:

SHORT SELLING
Currently there are 159 stocks in the futures and options (F&O) segment. It is a good starting point to allow short-selling in those scrips that are in the F&O segment. At a later stage, short-selling will be allowed in more stocks. The new system of Stock Lending & Borrowing mechanism will be through the stock exchange.

INVESTMENT ADVISORS
We are working on regulating investment advisors. The basic outline on this issue will be put up on the Sebi website shortly for public comments.

HEDGE FUNDS
It is very difficult to identify who qualifies as hedge funds and to classify one single category of funds as hedge funds. They may be using various investment strategies and hence the difficulty.

The Sebi would be collaborating with the home regulators on the issuers for ascertaining the identity of the participatory notes (PN) holders, through which most of the hedge fund money comes to India.

If some funds want to participate in the India story and just because it was using the hedge fund strategy, the Sebi will not come in their way.

IPO GRADING
The Sebi will hold a meeting this Friday with top executives of Crisil, ICRA and CARE to discuss the issues related to IPO grading.

Going forward, rating agencies will also look at share offerings made by companies earlier and the totality of the equity offering of a company. The rating agencies would not be commenting on the pricing of the issue.

DERIVATIVES
A committee on derivatives has been set up under Prof Ram Mohan Rao of the Indian School of Business, Hyderabad, to look into the introduction of new products.

REAL ESTATE MFs
The Ministry of Company Affairs will soon be putting out the registration of real estate valuers. There is a tripartite committee of Amfi, ICAI and Sebi looking into various aspects of the Real Estate MFs. Significant progress has been made on the valuation of unlisted real-estate assets. The next few months will see the introduction of the first products.

CONSENT ORDER
The Sebi has decided to introduce consent orders for matters pending regulatory action or pending before the SAT/Courts. FAQs have been put on the Sebi website.

DEBUTANTE SHARES
Sebi has put in place a mechanism to curb the huge price rise for stocks that are relisted on the stock market. The Sebi's surveillance committee, which includes members from the stock exchanges, is also looking into the price run up of IPOs on the listing day.

SROs
There are attempts to put in place SROs for market intermediaries. Sebi has received applications by trade bodies like Association of National Exchanges Members of India to form an SRO.