SEBI, vide circular dated January 5, 2024, issued a broad framework for short selling in the Indian securities market. Some of the key provisions are as follows:
- naked short selling is not permitted in the Indian securities market and accordingly, all investors have to honor their obligation of delivering the securities at the time of settlement;
- a scheme for Securities Lending and Borrowing will be put in place to provide the necessary impetus to short sell;
- securities traded in the Futures and Options segment will be eligible for short selling; and
- institutional investors must disclose upfront at the time of placement of order whether the transaction is a short sale.
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