Mumbai: Anxious over the unabated volatility on the domestic bourses, market regulator Securities and Exchange Board of India (SEBI) has laid down new rules for the stock market, which it says, will help to ensure market safety and protect investor interest.
SEBI says that the Bombay Stock Exchange and National Stock Exchange must implement intra-day, value-at-risk margins in the cash market from July 10.
The new Sebi rules state that the margins must be updated at least five times a day instead updating them of at the end of the day..
The market regulator says that the move aims to align risk management across cash and futures and options markets.
Currently in the cash market, the VaR margin rate is calculated at the end of the trading day and then applied to open positions of the subsequent trading day.
However, in the derivatives market, the risk parameter files for computation of the margins are updated intra-day.
A SEBI circular said, the update should be carried out by taking the closing price of the previous day at the start of trading and the prices at 1100 hrs, 1230 hrs, 1400 hrs IST and at the end of the trading session.
SEBI said, these measures were adopted with a view to ensuring market safety and protecting the interest of investors and also to further align the risk management framework across the cash and derivative markets.
In fact, the markets remained highly volatile even on Friday. The 30-share Sensex of the Bombay Stock Exchange (BSE) came off the day’s highs to end the day at 9,884.51, up 339.45 points.
Earlier in the day, the index crossed the 10,000-mark to touch an intra-day high of 10,118.28, up nearly 580 points over Thursday’s close.
The gains on Friday were supported by a rise in the volumes, which was not the case on the previous occasions.
BSE and NSE reported a higher turnover at Rs 4,142.78 crore and Rs 8,902.99 crore, respectively. The derivatives segment also clocked a higher turnover at Rs 27,771.62 crore.
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