The circular asked stock exchanges and depositories to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the decision, bring the provisions of the circular to the notice of the member brokers/clearing members, depository participants and communicate to the Sebi the status of the implementation of the provisions of the circular in the monthly development report submitted to the market regulator.

Short-selling refers to the practice of selling a stock which the seller does not own at the time of trade with the hope of buying it back at a lower price.

Sebi had come out with a circular on December 20, 2007, specifying the broad framework for short selling by institutional investors and a full-fledged securities lending and borrowing scheme for all market participants.