After eight months, Sebi eases certain surveillance measures in place to curb pandemic-induced volatility

Regulator Sebi on Wednesday relaxed certain surveillance measures, including those pertaining to market wide position limits, that were put in place eight months ago to curb volatility in the markets due to the coronavirus pandemic.

Citing the "changed market environment", the watchdog has decided to relax the measures with respect to increased margin for non-F&O (Futures & Options) stocks and revised?market wide position limits.

Steps related to flexing of dynamic price band for F&O and equity index derivatives (F&O) would continue to be in force, Sebi said in a statement.

The surveillance measures, announced in March, are in force till November 26. They are aimed at ensuring orderly trading and settlement, effective risk management, price discovery and maintenance of market integrity.

Among the measures, the watchdog had increased the margin requirement for non-F&O stocks in cash market and revised Market Wide Position Limit (MWPL) from 95 per cent to 50 per cent of existing levels in a phased manner.

On Wednesday, Sebi said these two measures would be relaxed with effect from close of business on November 26.

"Based on market feedback and changed market environment, the above regulatory?measures have been reviewed," the statement said.

Besides, Sebi said MWPL would be withdrawn subject to continuation of certain conditions till further directions.

In case MWPL utilisation in a security crosses 95 per cent, derivative contracts will enter into a ban period. Then, all clients or trading members are required to trade in the derivative contracts of said scrips only to decrease their positions through offsetting positions, Sebi said.

Any increase in open positions would attract appropriate penal or disciplinary action of the stock exchanges or clearing?corporations, it added.

Further, stock exchanges or clearing corporation would continue to check on an intra-day basis whether any member or client has exceeded their existing positions or has created a new position in the scrips in the new ban period.

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According to Sebi, dynamic price bands for F&O stocks could be flexed only after a cooling-off period of 15 minutes from the time of meeting the existing criteria specified by stock exchanges for flexing.