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Sebi moots volatility checks

The Securities and Exchange Board of India has decided to introduce a circuit breaker that will be used to halt trading in case of excessive volatility in the stock markets, the regulator said late on Thursday.

Trading will be halted across all exchanges if either the benchmark Bombay Stock Exchange 30-share index or the 50-share National Stock Exchange index shows a 10 per cent, 15 per cent or 20 per cent movement in either direction with reference to an index level which will be fixed every quarter.

The halts will be for varying periods of time, depending on the extent and time of the index movement, Sebi said in a statement after a meeting of its risk management panel.

This becomes effective from July 2.

The panel also recommended individual price bands of 20 per cent for all scrips in rolling settlements that do not have a facility for options trading.

The Sebi board had recently decided to do away with price bands for all shares in rolling settlements.

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