SEBI, exchanges step up vigil on stocks that are volatile

At a time when many stocks are experiencing extreme bouts of volatility due to various factors, including negative news flow, the Securities and Exchange Board of India (SEBI) and the stock exchanges have increased the vigil on such stocks by introducing measures to minimise the probability of fraudulent activities.

While the capital markets regulator has tweaked the norms for derivative contracts, especially for such volatile stocks, exchanges have amended the dynamic circuit filters for stocks which are part of the derivative segment.

The capital markets watchdog, which has already laid down a roadmap for all stocks in the derivatives segment move towards physical settlement, has now mandated that stocks that see extreme volatility have to be moved to a physical settlement mechanism immediately from the new expiry cycle. This will be applicable for stocks that witness 10% or more intraday movement on 10 or more occasions in last six months or those that register 10% or more intraday movement on three or more occasions in the last one month.

Securities and Exchange Board of India ( SEBI )