India's stock exchanges will bring in additional surveillance measures to reduce volatility in stocks having high promoter pledge.
The National Stock Exchange of India Ltd. and BSE Ltd., according to circulars uploaded on their websites, have decided to impose a minimum margin of 35 percent on stocks, including those part of the derivatives market, if they satisfy the following criteria:
- Market capitalisation is greater than Rs 1,000 crore.
- Pledged holding of the promoter accounts for more than 25 percent of the total number of the issued shares of the company.
- Concentration of top 25 clients in trading during the last 30 days is 30 percent or more.
- High-low price variation in the scrip in the last three months is greater than 40 percent.
The surveillance measures, which according to the bourses are aimed at ensuring market safety and safeguarding interest of investors—were decided at a meeting of stock exchanges and the Securities and Exchange Board of India. They will be implemented from Nov. 1, 2019.
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