Sebi goes slow on trade annulment

The Securities & Exchange Board of India (Sebi), on Friday, said it is planning to issue a framework for annulment of trades following the growing instances of “freak trade” in the market but at the same time it does not want to rush with modifications in the existing risk management system.

Addressing the Capital Market Conference organised by industry body Ficci, Sebi chairman U K Sinha said changes in the rules governing trade annulment in the event of massive erroneous trades will take some time as it (Sebi) does not want to rush with modifications in the existing risk management system.

“We don’t want to tinker with (the rules on annulment of trades) in a hurry,” Sinha said and pointed out that the process will take some time.  He was responding to a query whether Sebi is planning to change the rules regarding annulling of erroneously trades. For one, he explained: We want to be very cautious in whatever new structures we put in place now.

Our risk management mechanism, put in place in 2000, has by and large withstood the test of time.

The NSE’s benchmark index Nifty last Friday had seen a sharp drop after erroneous orders aggregating to a value of Rs 650 crore got placed by a NSE broking member Emkay Global Finance.