Sebi allows institutional short-selling from Feb 1

The Securities and Exchange Board of India (Sebi) on Wednesday said it
would allow short-selling by domestic and foreign institutional
investors from February 1. Last month, Sebi had given its nod for
short-selling, which it had banned in 2001 in the aftermath of Ketan
Parekh scam.

"The Reserve Bank of India has given its nod to Foreign Institutional
Investors (FIIs) for short-selling, now Sebi will allow it for all
institutional investors from February 1," said Sebi chairman M
Damodaran here.

Damodaran's comment came a day after the RBI allowed FIIs and their
sub-accounts to short sell, lend and borrow equity shares in Indian
companies. All institutional investors, overseas and domestic, would
be able to short sell, Damodaran said.

Damodaran was addressing the national programme on director
orientation organised by the Institute of Company Secretaries of India
(ICSI).

He further said that Sebi was ready to review the 10 per cent limit of
stake held by directors or key management personnel in a company,
proposed to be brought under the insider trading norms.

"What we have put out yesterday is a paper for discussion. Whether 10
per cent limit of stake held by officers or promoters was too high or
low will be finalised after receiving public comments," he said.

This regulation, Damodaran said, was aimed at checking insiders, who
have greater access to price-sensitive company information, of making
short-term profits.

Earlier, Sebi in order to curb insider trading, had proposed that
company insiders should surrender profits made in any equity-based
securities transactions of the company, if both the buy and sell side
of the transaction are entered into within six months of the other.
The regulator has invited public comments on the discussion paper by
January 21.