Sebi mulls easing of short-selling curbs, says report

Sebi in January 2024 updated short-selling framework with two provisions.

The Securities and Exchange Board of India (Sebi) is considering a proposal to ease restrictions on short-selling on most stocks, The Economic Times has reported.

The move comes after the broking industry said that the capital market regulator's January 2024 proposal to bar short-selling in stocks that are not in the future and options segment had caused uncertainty, the report said.

Short selling is a trading strategy where an investor profits by selling borrowed shares when the price of the stock declines. The investor then buys back the shares at a lower price and returns them to the lender.

The proposal was discussed in a recent meeting of the Sebi-appointed secondary market advisory committee (SMAC), the report added.

Moneycontrol couldn't verify the report independently.

If the proposal is implemented, it may allow short selling in all stocks except in the trade-to-trade or T2T segment, the report cited sources as saying.

Also Read | Why short sellers are a boon and not a bane for markets

Sebi in January 2024 updated short-selling framework with two provisions.

The first of the updated provisions says, "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 second reads, "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 every week. The frequency of such disclosure may be reviewed from time to time with the approval of SEBI."