Ban On Short Selling In Daytrading

deepanshuarya · #1 20th March 2008, 03:32 PM

I read Economic Times and to my horror I found "“naked short-selling will not be permitted and all investors will be mandatorily required to honour their obligation of delivering the securities at the time of settlement."
this would mean that day traders would no longer be in a position to sell and then buy back during the day. The new guideline will not only force these active investors to change the way they play the market, but also impact liquidity in the short term.

The tenure of borrowing/lending shall be fixed at 7 days. investors may have to first borrow them to short-sell and for this, exchanges may allow a one-hour window in the morning. This will allow players to borrow in the morning and sell during the day.
(Now the big question is there are times who don't know that today u r going to short sell. Its later in the day that after determing the trend u decide to first short or to first buy).

SOURCE:http://economictimes.***************...ow/2882753.cms

fire_gun · #2 20th March 2008, 06:56 PM

any thoughts from senior members??/ if this going to be happen it will dry up all liquidity from market..........

lolr2 · #3 20th March 2008, 07:02 PM

Normal shorting will be there, naked shorting wont be allowed. U can borrow it from someone and sell it during the day. As of now u can go short without actually owning it or borrowing it

I dont know how effective it would be since going short on futures could be easier, am not exactly sure of the costs etc involved in this procedure but if using futures is easier then liquidity might go down a bit !!

Dev Mookerji · #4 20th March 2008, 07:15 PM

I think it is applicable for FIIs but not for retail investors/traders.

rajsingh · #5 20th March 2008, 07:17 PM

Things are not clear yet. Let us wait for the fine print. I am sure our ingenious brokers will come out with something. Else they are going to loose out on brokerage as well.

lolr2 · #6 20th March 2008, 07:29 PM

I am a noob to trading ....i dont know if the naked shorting or normal shorting is the current practise which retail investors follow. I made the above post asuming naked shorting is in practise...plz correct me if i am wrong

Initially, securities traded in Futures and Options segment will be eligible for short-selling and SEBI may review the list of stocks that are eligible for short-selling transactions from time to time.

http://economictimes.***************...ow/2882272.cms

BOLindia · #7 20th March 2008, 07:59 PM

As far as i know, this applies to FII's and the limit has also been prescribed to them for the amount of short selling that they can do. Please visit SEBI website for more clarification

Regards

hari09omkar · #8 20th March 2008, 08:49 PM

I read the article too and it goes like this:Investors can short-sell from April 21 and now in delivery format of 7 day settlement!!!
"Short-selling transactions will be done through a separate screen, other than the one currently in use for regular transactions.

The new platform, an automated, screen-based and order-matching system similar to current trading terminals, will be provided by the clearing houses of stock exchanges. To begin with, all stocks in the futures and option segments will be eligible for borrowing and lending.

The tenure of borrowing/lending shall be fixed at 7 days."
My trading will have a negative impact by this awkward move of banning short-selling for day traders!O God!!!

sunil saranjame · #9 20th March 2008, 09:48 PM

No! You guys are confused. There is a seperate SLB (Securities Lending and Borrowing) mechanism for this. Intra-day short sell will NOT be affected in any way.

Download these two pdf files from SEBI - Link

ss

kkseal · #10 20th March 2008, 10:11 PM

Quote:

Originally Posted by Dev Mookerji

I think it is applicable for FIIs but not for retail investors/traders.

Woooo that's bad news i would have liked delivery based shorting in cash.