INSUBCONTINENT EXCLUSIVE:
MUMBAI:Market participants are directing their ire at the Securities and Exchange Board of India (Sebi) over the recent turmoil in mid- and
small-cap shares, saying that the capital markets regulator should focus on catching manipulators instead of trying to control
trading.
Investors and brokers have criticised the introduction of a new risk mitigation process, known as Additional Surveillance Measures
(ASM), which restricted share price movements and imposed higher margins on purchases.
In a letter to Sebi chairman Ajay Tyagi, Sandeep Shah
It said that this measure sucked liquidity out of mid- and small-cap shares instead of punishing manipulators.
Sebi introduced ASM in March
to put a check on the frenzied activity in several smaller shares
Under ASM, investors must pay upfront 100% margin to buy these stocks
Also, the maximum a stock could move in a day was 5 per cent.
The step deepened the slide in the broader market, already jittery about
rising oil prices, trade war and a weakening rupee and record-high share valuations
Liquidity in stocks which were put under ASM plunged drastically along with the decline in share prices
Out of the 124 stocks currently under ASM, volumes in 76 stocks declined up to 90 per cent in July over June
Several traders, who borrowed and traded in midand small-cap stocks that were not in ASM, stayed away for fear that their stocks would be
Daily average volumes of Rain Industries, Indiabulls Integrated Services, Himadri Speciality Chemical, Venkys (India) and Dilip Buildcon,
among others, too declined between 25 per cent and 50 per cent in July from the June
The move to include stocks like Rain Industries, HEG and Graphite India, perceived to be companies with strong earnings prospects, had
shortlisting stocks under ASM
Valuations, measured by price to earnings ratio, should be determined by the market and not by the capital markets regulator, it said
such trade and then informs the client of such activity, whether it is taking place knowingly or unknowingly or alerts the broker that a
particular client at a particular office is engaging in such an activity or marks a red flag for that particular script so that investor/
Baheti, national president, Association of National Exchanges Members of India
MidCap and SmallCap indices have declined nearly 5 per cent and 7 per cent since April 1 as against a 10 per cent surge in the benchmark
fallen between 15 per cent and 25 per cent since July 1
Forum.
Some are less critical
