Indiabulls Housing Finance is the first stock to be banned from trading in the futures and options segment by the National Stock Exchange for Thursday, May 12, as the scrip crossed 95 percent of the market-wide position limit the previous day.
Indiabulls Housing Finance was the biggest loser on May 11 on the bourses, with high volumes, falling 20.5 percent to close at Rs 111.15, the lowest level since April 2020. In last five months, the stock has declined 58 percent.
In a filing to exchanges on May 11, Indiabulls Housing Finance said the Asset Liability Management Committee (ALCO) has decided to make an offer to the NCD holders to acquire these NCDs on the exchange at par under a negotiated trade with each individual NCD holder and hold them as treasury stock until maturity.
If any NCD holder decides to sell their holdings on the exchange to the company under a negotiated trade, then they are required to "get in touch with the company personnel" prior to June 28, 2022 to effect the trade, the company added.
If derivative contracts in securities crossed 95 percent of the market-wide position limit, they end up on the ban list, the NSE said.
“All clients/members shall trade in the derivative contracts of the said security only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action,” the NSE said.
During the ban, traders are not allowed to take fresh positions in stocks but can start reducing their positions. The F&O ban rule helps reduce speculation in stocks.
The market-wide position limit, which is set by stock exchanges, is the maximum number of outstanding open positions (buy and sell) in the F&O contracts of a security. If the open interest in a stock crosses 95 percent of the market-wide position limit, its F&O contracts enter the ban period.