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Steps to protect investors against stock crash soon: Sebi

Last updated on: November 23, 2012 13:50 IST

SebiMarket regulator Securities and Exchange Board of India said on Friday it will soon announce measures to protect investors against stock crashes on the bourses.

Last month, the National Stock Exchange witnessed 'flash crash', when the Mumbai-based brokerage Emkay Global Financial Services sent the exchange index tumbling as much as 15.5 per cent in just a few seconds, creating a panic among traders.

The crash was the result of erroneous trades worth $126 million, placed by Emkay Global.

"We are going to take some measures so that there is some pre-check in orders, in pricing and there are some other checks also introduced.

"We are looking at avoiding similar incidents," Sebi chairman U K Sinha told reporters on the sidelines of a securities market conference in Mumbai.

"We are going to announce some measures based on experts views.

Lapses on part of any intermediaries will be looked at separately and actions will be taken," Sinha said.

He assured the regulator is acting on both the fronts -- systematic improvement and action for lapses.

Commenting on regulator's decision to discontinue mini-derivatives contracts, Sebi Chairman Sinha said as measure of experiment, Sebi allowed mini derivativescontracts, but data show that trading in mini contacts constitute only a minuscule and it was felt that there might be certain amount of misuse and mis-selling

happening in those contracts.

"Therefore, as a measure to provide safety to small investors we have taken the decision to discontinue mini contracts," Sinha said.

Derivatives contracts first started with a minimum ticket size of Rs 2 lakh in the country. But earlier this week, the regulator banned it.

Replying to a query on call-data records, Sinha said, at his meeting with the government officials, they assured him that they are going to find a way on how to provide that data.

"The difficulty on the part of the government is that there is a judicial pronouncement about how conversation can be shared or intercepted.

"I was given to understand that keeping that sensitivity in mind -- that privacy of all are respected -- at the same time providing some rule whereby regulators like Sebi can get access to call data records.

"They are thinking of amending the rules. I am not talking of law, but the rules. I believe the rule making process is on and hopefully it will be ready soon," Sinha said.

This Sunday, Finance Minister P Chidambaram had told PTI in an interview that Sebi would be allowed to access call records on a case-to-case basis from the designated government agency but could not on its own tap phones.

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