SEBI Says Institutional Investors Need To Disclose Short Sales Upfront

Markets watchdog SEBI on Friday said that institutional investors have to disclose upfront at the time of placing an order whether a proposed transaction is a short sale or not, a significant move aimed at curbing market volatility.

The Securities and Exchange Board of India has made certain changes with respect to norms pertaining to short selling in the market.

Short selling refers to selling a stock which the seller does not own at the time of trade. Both retail and institutional investors are permitted to short sell stocks.

Amending a circular relating to short selling issued last year, SEBI said, "the institutional investors shall disclose upfront at the time of placement of order whether the transaction is a short sale."

However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.

"The brokers shall be mandated to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day.

"The stock exchanges shall then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis," SEBI said in a circular on Friday.

The circular, issued to stock exchanges, clearing corporations and depositories, also said the frequency of such disclosures may be reviewed from time to time with the approval of SEBI.

In recent times, there have been concerns about the practice of short selling and subsequent volatility in the securities market.