Ban On Short Selling In Daytrading
- Thread starter deepanshuarya
- Start date
But wait a minute, that Annexure 1 does say at one place (pt 3) 'Naked short selling shall not be permitted in the Indian securities market and accordingly,all investors would be required to mandatorily honour their obligation of delivering the securities at the time of settlement.'
The part of the statement in bold is as broad & categorical as it can get & if you combine it with the rest what does it imply - are they moving to (securities) delivery based settlement for all categories & sections (at least for short sells)??
Regards,
Kalyan.
The part of the statement in bold is as broad & categorical as it can get & if you combine it with the rest what does it imply - are they moving to (securities) delivery based settlement for all categories & sections (at least for short sells)??
Regards,
Kalyan.
Intraday Guy Who Shorted The Stock & Covered It Before The Market Closed Will Not Be Affected.
This New SLB Is For Settlement Period Which Happens To Be T+2
Where The Borrowing Of Stock Comes Into Play.
This Is Only For Stocks Which Are Traded In Derivatives
In My Opinion Big Brokers Are Going To Charge You For Borrowing The Stock Which Will Be Additional Impact Cost. Something Similar Was The Practice Of Selling The Futures & Buying The Lot Quantity In Cash, If The Future Traded At A Significant Premium To The Underlying Price In Spot.
Idea Behind Such Trades Was That The Price Closer To Expiry Would Converge & Give You The Arbitrage Benefit Of The Convergence.
Now If You Shorted ONGC @ 1025 In Futures & Bought 225 Shares In Spot @ 1000 In Cash The Price Near Close To Expiry Would Converge Lets Say To 1015 In Cash & Futures Where You Would Sell The Shares & Cover Your Short In The Future. Thus Giving You A Little Profit Because Of The Significant Mismatch Of The Price. OK Guys Need Just Marging Money & MTM For The Future Therefore Anybody Buying 225 Shares Of ONGC Would Require Funding To Buy In Cash....That Presented Additional Impact Of The Borrowing Cost For The Duration.
Brokers Are Going To Be Making More Money At The End Of It All.
Ofcourse It Has Different Implications For FIIs To Be Doing It...Lets See How It All Pans Out After Being Rolled Out.
SavantGarde
This New SLB Is For Settlement Period Which Happens To Be T+2
Where The Borrowing Of Stock Comes Into Play.
This Is Only For Stocks Which Are Traded In Derivatives
In My Opinion Big Brokers Are Going To Charge You For Borrowing The Stock Which Will Be Additional Impact Cost. Something Similar Was The Practice Of Selling The Futures & Buying The Lot Quantity In Cash, If The Future Traded At A Significant Premium To The Underlying Price In Spot.
Idea Behind Such Trades Was That The Price Closer To Expiry Would Converge & Give You The Arbitrage Benefit Of The Convergence.
Now If You Shorted ONGC @ 1025 In Futures & Bought 225 Shares In Spot @ 1000 In Cash The Price Near Close To Expiry Would Converge Lets Say To 1015 In Cash & Futures Where You Would Sell The Shares & Cover Your Short In The Future. Thus Giving You A Little Profit Because Of The Significant Mismatch Of The Price. OK Guys Need Just Marging Money & MTM For The Future Therefore Anybody Buying 225 Shares Of ONGC Would Require Funding To Buy In Cash....That Presented Additional Impact Of The Borrowing Cost For The Duration.
Brokers Are Going To Be Making More Money At The End Of It All.
Ofcourse It Has Different Implications For FIIs To Be Doing It...Lets See How It All Pans Out After Being Rolled Out.
SavantGarde
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Thats such a big relief....Economic times guys should work on the details and be more specific. Liberal Media wrong again in a hurry to make news they made curry. I almost lost my sleep. I tried tried looking at SEBI webpage for this circular before inserting this thread but I couldn't find. Thanks a lot Sunil.
From the Circular:
1 - Short selling shall be defined as selling a stock which the seller does not own at the time of trade.
2 - No institutional investor shall be allowed to do day trading i.e., square-off their transactions intra-day.
3 - The custodians, however, would continue to settle their deliveries on a net basis with the stock exchanges
4 - The institutional investors shall disclose upfront at the time of placement of order whether the transaction is a short sale.
5 - However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.
This means that a regular small retail DayTrader Like millions of me will still be doing business as usual.
From the Circular:
1 - Short selling shall be defined as selling a stock which the seller does not own at the time of trade.
2 - No institutional investor shall be allowed to do day trading i.e., square-off their transactions intra-day.
3 - The custodians, however, would continue to settle their deliveries on a net basis with the stock exchanges
4 - The institutional investors shall disclose upfront at the time of placement of order whether the transaction is a short sale.
5 - However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.
This means that a regular small retail DayTrader Like millions of me will still be doing business as usual.
H
Today's Economic times repoter is saying:
"There was some confusion if all classes of investors have been barred from naked short selling.However a Sebi official told ET that only institutions have been barred from naked short sales.Retail investors can continue to square off their short sell trades on an intraday basis,as they have been doing so far."
Now this is not in accord with Sebi's annexure 1,point 3:
"Naked short selling shall not be permitted in the Indian securities market
and accordingly, all investors would be required to mandatorily honour
their obligation of delivering the securities at the time of settlement."
Very confusing.
"There was some confusion if all classes of investors have been barred from naked short selling.However a Sebi official told ET that only institutions have been barred from naked short sales.Retail investors can continue to square off their short sell trades on an intraday basis,as they have been doing so far."
Now this is not in accord with Sebi's annexure 1,point 3:
"Naked short selling shall not be permitted in the Indian securities market
and accordingly, all investors would be required to mandatorily honour
their obligation of delivering the securities at the time of settlement."
Very confusing.
Sir,
The Annexure I defines Short Selling in Para 1 as selling a security not owned at the time of trade.
Further, as already pointed out, Para 3 clarifies that Naked Short Selling shall not be permitted in the Indian Securities Market.
From the above, we cannot infer that intraday short selling will not be affected.
Regards.
Srisrini
The Annexure I defines Short Selling in Para 1 as selling a security not owned at the time of trade.
Further, as already pointed out, Para 3 clarifies that Naked Short Selling shall not be permitted in the Indian Securities Market.
From the above, we cannot infer that intraday short selling will not be affected.
Regards.
Srisrini
