In a new circular issued on Friday, the Securities and Exchange Board of India (SEBI) has mandated that institutional investors must disclose whether a transaction is a short sale at the time of placing an order. On the other hand, retail investors will have the flexibility to make a similar disclosure by the end of the trading day.
The circular specifies that brokers are required to collect details on scrip-wise short sell positions, compile the data, and upload it to stock exchanges before the start of trading on the following day. Stock exchanges will then consolidate this information and disseminate it on their websites weekly for public information. SEBI retains the authority to review the frequency of such disclosures with its approval.
While SEBI permits short selling for all classes of investors, including retail and institutional, it has imposed specific conditions to prevent misuse and ensure market integrity.
This decision follows closely on the heels of a Supreme Court judgment related to petitions seeking a court-monitored investigation into alleged manipulation in Adani Group stocks following the Hindenburg report. Although the Supreme Court rejected the plea, it instructed SEBI to investigate whether Indian investors incurred losses due to the research agency's actions or if there were short positions taken in the market that violated the law.
SEBI had previously issued a Master Circular for Stock Exchanges and Clearing Corporations in October 2023, and the latest circular now incorporates new provisions in line with its ongoing efforts to enhance transparency and oversight in the Indian securities market.
(With Agency Inputs)
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