Sebi mulls annulment policy for freak trades

Sebi is looking to frame a ‘trade annulment policy’ to cancel the freak trade orders that might have wider ramifications in terms of impact on the indices or other stocks.

The annulment policy would look at safeguarding the broader market interests from the freak orders executed erroneously, such as ‘fat-finger trades’ or punching errors, as also the trade orders entered intentionally by the manipulators to make illicit gains or to sabotage the overall market sentiments, an official said.

Sebi may soon issue a discussion paper on the ways to handle the freak trades executed erroneously, as also the possible manipulative actions disguised as genuine errors, he said.

The issue has already been discussed internally and with experts and the proposed steps, subject to a wider consultations, might include a stronger system for checks and balances at the end of market infrastructure institutions like stock exchanges and the intermediaries such as brokerages.

Besides, the regulator would also look at taking strict penal actions if some miscreants or manipulators are found to be behind such incidents.