Short selling to commence from April 21
SEBI is all set to allow retail and institutional investors to short-sell shares in the spot market from April 21.
Short-selling refers to the practice of selling a stock which the seller does not own at the time of trade with the hope of buying it back at a lower price. Presently, this is done intra-day by individuals, and FIIs and the like were not allowed to dabble in this.
Now, SEBI is putting in place a mechanism where the short-seller can borrow the shares to meet the delivery commitment. Just as an investor borrows money to buy shares, it will now be possible to borrow shares to sell. Under this, all categories of investors can now lend the stocks they own and borrow the ones they don’t, though naked short selling will not be allowed.
To begin with, all stocks in the futures and option segments will be eligible for borrowing and lending, and the tenure of borrowing / lending will be fixed at 7 days.
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