Sebi is looking into possible irregularities in the equity derivatives market, as it fears that investors are being lured into huge volumes created through trade among connected entities.
While the exchanges have been told to make public the details of trading by ‘connected entities’ for the benefit of common investors, Sebi is also looking into the trading pattern of major groups of such connected entities to detect any possible manipulative activities.
As part of these efforts, the stock exchanges from April would start publishing the combined open positions of group of connected entities on their websites twice a month., a senior official said.
A group of persons and entities would be considered as ‘connected entities’ if there are common directors, partners or trustees in more than one companies.
However, independent directors would not be considered for making such clusters of connected entities, even if they are on the board of more than one company.
The exchanges would make public the data of total open interest of each group in the equity derivatives segment, if the combined position of any such group exceeds the higher amount of one per cent of the company's free-float capital, or 5% of the total market-wide open interest.