SEBI acts to reduce volatility

The market has seen a high volatility in the past few weeks. SEBI on Friday took few measures to curtail this volatility. These include halving position limits for certain stock futures, restricting short-selling of index derivatives and raising margin rates for some shares.

The markets around the globe have plummeted over the past few days as the economies all over the world are at a standstill.

Nifty 50 Index saw its best one-day gain in more than six months on Friday as policymakers across the globe launched fresh efforts to stem the economic fallout. However, the index ended the week more than 12 per cent lower.

India's volatility index saw levels that were last seen during the aftermath of 2008 financial crisis.

If the open interest in a stock is more than 95 per cent of its position limit, the derivative contract will enter a ban period, in which investors can only reduce their positions. As a result, a lower position limit would automatically push scrips with high open interest into a ban.

SEBI also restricted the extent of short-selling of index derivatives by mutual funds, foreign portfolio investors and proprietary traders to their stock holdings.