The Hindu : Business : New window for block deals in stocks

Online edition of India's National Newspaper
Wednesday, Nov 16, 2005

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Business

New window for block deals in stocks

The system will operate from Monday; easier delisting norms soon, says SEBI Chairman

FOR GREATER TRANSPARENCY: The Chairman, Securities and Exchange Board of India, M. Damodaran (left), the Head of Nasdaq International, Charlotte Crosswell (centre), and the Managing Director and Chief Executive Officer, National Stock Exchange, Ravi Narain, at a press conference in New Delhi on Tuesday. — Photo: Kamal Narang

NEW DELHI: Securities and Exchange Board of India (SEBI) Chairman M. Damodaran on Tuesday announced creation of a separate window in both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for executing huge block deals, a move that will check intra-day volatility on this count on the bourses.

"The window will be operational for the first half an hour, that is, from 9.55 am to 10.25 am,'' Mr. Damodaran told mediapersons here after addressing the Hindustan Times-Leadership Summit.

Along with Mr. Damodaran, the event was addressed by Charlotte Crosswell, Head, Nasdaq, and Ravi Narain, CEO and Managing Director of NSE.

Threshold limit

Mr. Narain said the threshold limit would not be reviewed, notwithstanding the setting up of a separate window. Often the name and details of the buyer in these deals were not disclosed if they fell below a certain threshold level.

Large intra-day volatility is experienced on the stock exchanges when these block deals are carried out. Keeping them outside the purview of the time after the first half an hour will stem this volatility.

Mr Narain said details of the new arrangement would be released soon by the stock exchanges and stated that the system will become operative from Monday.

He said the new arrangement would bring in greater transparency.

Asked whether the vast oscillations in share price movements and intra-day volatility on the stock markets accrued from cartel behaviour, Mr. Damodaran said if the regulator visualised that there was manipulation it would act.

``Every regulator is comfortable if it knows which is the entity that is acting in the market.''

Mr Damodaran said both easier delisting norms and the process of compulsory delisting were under way and would be in place soon. However, no deadline had been set for the purpose.

Besides, Mr. Damodaran, said the stock exchanges would come out with easier norms for IPOs, which would reduce the transaction cost of floating an issue.

He said short selling by institutions was likely to become operational by March 2006. Mr. Damodaran noted that short selling by individuals was allowed at present.

Nasdaq invites more firms

U.S. stock exchange Nasdaq on Tuesday invited more Indian firms to get listed in the bourse to graduate into global corporations.

Addressing the Summit, Ms. Crosswell praised SEBI for its regulatory regime that ``is comparable with the best in the world.'' With a market capitalisation of $510 billion, the Indian capital market, she said, had overtaken Korea and Taiwan.

After the Indian economy rebounded strikingly from the global slowdown, ``many Indian companies are now well positioned for domestic and international IPOs.'' Indian companies were now in the radar of global investors who were chasing new growth opportunities.

"What is attracting foreign investment into India is the fact that Indian markets are clearly well regulated and have adopted efficient trading, clearing and settlement process,'' she said.

The Nasdaq official expressed surprise at the fact that 125 Indian companies, including PSUs and banks, had adopted the stringent accounting procedures of US GAAP.

Nasdaq, which had opened an office in Bangalore in 2001, would assist not only listed companies but also those willing to list their shares in the U.S. bourse, she said.

For graduating into a global corporation, Ms. Crosswell said a company must be resilient to uncertainties, professionally managed, have deep knowledge of the market and list its share. Listing abroad helped a company develop a global reputation, establish credibility and increase visibility to investors, she felt. In this context, she cited the example of Infosys along with other global giants like Microsoft, Intel, Cognizant and Syntel. — UNI, PTI

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