How Sebi plans to curb market volatility

Among other measures, for stocks in F&O segment meeting certain criteria, Market Wide Position Limit might be revised to 50 per cent of the existing levels.

Market regulator Sebi on Friday came out with various measures, including revision of market wide position limit, to ensure orderly trading and settlement, amidst continuing volatility in the securities market.

The measures would be effective from March 23 and would be in place for one month, it said in a release.

Taking note of the continued abnormally high volatility in the market, Sebi said it discussed with stock exchanges, clearing corporations and depositories appropriate measures that may be taken in the existing circumstances.

Among other steps, Market Wide Position Limit (MWPL) would be revised.

For stocks in F&O segment meeting certain criteria, MWPL might be revised to 50 per cent of the existing levels.

The margin for stocks meeting specific criteria would be increased, apart from having revised position limits in equity index derivatives (futures and options).

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, Sebi said.

"Sebi and stock exchanges will continuously monitor the market developments and review the position and take any further suitable actions as may be required," the watchdog said.

The volatility is mainly on account of concerns over the fallout of the coronavirus pandemic.

Photograph: Shailesh Andrade/Reuters