Investment companies will choose shares that are prepared for direct listing under SEBI’s new regulations.
The Securities and Exchange Board of India has announced stricter norms for the entry of individual stocks in the derivatives segment. It said that these norms will help reduce the risk of market manipulation, increased volatility and compromising investor protection.
The proposal states that if a stock fails to meet the new criteria for three consecutive months, it should exit the derivatives segment and cannot claim new contracts.
The new rules have been proposed keeping in mind the significant increase in market parameters reflecting the size and liquidity of the cash market such as market capitalization and turnover.
Only stocks in the derivatives segment can be included in benchmarks Nifty, Sensex and other indices, making Sebi’s review of eligibility criteria for stocks in the derivatives segment, the first in six years, a significant move, market experts said.
