In what can be seen as another closer step towards bringing in strict measures against short selling, or a possible ban, the Securities & Exchange Board of India (Sebi) has sent out a communication to the foreign institutional investors (FIIs), disapproving overseas lending or borrowing exerting selling pressure in the cash market in India.
"Sebi has communicated its disapproval to the FIls. The lending and borrowing activity of FIls is being monitored and, if necessary, stronger measures will be taken by Sebi as considered appropriate," said a Sebi statement. Sebi said it was reviewing the data submitted by FIIs about their stock lending activities abroad. Though the stock lending mechanism is operational in India, the regulator finds that institutions are not using the facility. Sebi is also reviewing the difficulties in using the lending and borrowing facility and would be taking steps to make this mechanism more effective, the statement said. Meanwhile, sources close to the development mention that the regulator is contemplating a ban on short sales if the market slides get steeper. "The ICICI Bank case, where there was sustained slide based on rumours, is also being observed closely." And Sebi will not hesitate to take stringent action to cut out excessive short-selling pressure, he said. Sebi data, released on October 17, on securities lent for short sales or overseas derivative instruments by FIIs abroad, reveals a strong short position build-up between October 7 and October 10. Numbers reported by 17 FIIs reveal a build-up of short positions in the market from October 3 till October 10, when the market saw 16% fall, one of its largest. However, despite this bear hammering, the market continued smoothly and there were no reports of large defaults. The data for around 42 companies reveals that between October 10 and 14, around 1.07 crore shares were lent to overseas investors for covering their short positions of synthetic instruments. A closer look reveals huge short positions were being built from October 6 and intensified on October 10. The Sensex tanked by 800 points on October 10 http://www.financialexpress.com/news/fiis-rapped-for-lending-shares-abroad/375884/ Patience is beautiful. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
