Skip to main content

SURVEILLANCE

Image
By

SURVEILLANCE AT BSE: A Stock Exchange not only promotes trading of securities but also monitor the price and volume movement of securities. The monitoring process is known as surveillance. 

The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways:

■ By monitoring price and volume movements;

■ By detecting potential market abuses. 

Price monitoring is mainly related to abnormal movement of price of particular scrips in the Stock Exchange. Volume monitoring relates to abnormal positions of a member (Broker) i. e. purchase of abnormal quantity by a broker.

OBJECTS 

■ Stock Exchange is to monitor price and volume movement as well as also detecting potential market abuse.

■ To control market abuse.

■ To manage default risk by taking necessary action. 

In short, surveillance means detection of the possible market abuse in respect of price movement/abnormal fluctuation in prices or volumes.

ON – LINE SURVEILLANCE: Online surveillance system has facility to generate the alerts on – line, in real time, based on certain preset parameters like price & volume variations in scrips, members taking unduly large positions not commensurate with their financial position in one or two scrips. It alerts immediately to the officials of Stock Exchange about the abnormal behavior of members. 

OFF – LINE SURVEILLANCE:  The Off – Line Surveillance system is based on various reports like High/Low Difference in prices, Percentage change in prices over a week/fortnight/month, trading in infrequently traded scrips and scrips hitting New High/Low. 

DERIVATIVE MARKET SURVEILLANCE: Under this category, the focus areas are like abnormal fluctuation in the prices of a Series, Market Movement (Cash vis – a – vis Derivative), Member Concentration (Cash vis – a – vis Derivative) and Closing Price Manipulation (Cash & Derivative). 

INVESTIGATION: The Exchange conducts in – depth investigations based on preliminary enquiries/analysis made into trading of the scrip and also at the instance of SEBI. 

SURVEILLANCE ACTION:

■ SPECIAL MARGINS:  Special margin may be imposed by BSE from time to time on certain Securities as a surveillance measure and informed to the Members through notices.  Special margins are imposed on stocks which witness abnormal movement in price or volume. It is a surveillance measure intended to check speculative activity in particular scrip. At the BSE, the margin is levied at 25% or 50%.  This largely depends on the sharpness in the movement of share price or volumes, client wise net outstanding purchase or sale position or on both sides.

Comments

Post a Comment

Popular posts from this blog

BANKING BACKGROUND AND ITS GROWTH:

By
BANKING BACKGROUND AND ITS GROWTH For having a healthy economy there has to be a sound and effective banking system. The banking system of India should be able to meet new challenges posed by the technology and any other internal and external factors. For the past three decades several significant achievements have been observed in Indian banking system especially towards credit facilities. In fact, Indian banking system has reached gradually to remote places of the country also. The government’s regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks in India. The first bank in India (although conservative/rigid) was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct stages. Stage-I:  Early phase from 1786 to 1969 of Indian Banks. Stage-II: Nationalization of Indian Banks and unto 1991 prior to Indian banking sector reforms. Stage-III:   New ...
3 comments
Read more

MORTGAGE BACKED SECURITIES

By
Mortgage – backed securities (MBS) are bonds secured by home and other real estate loans. They are created when a number of these loans, usually with similar characteristics, are pooled together. These securities assure a fixed return which is derived from the performance of the specific assets. They are issued with a maturity period of 3 to 10 years and backed by pooled assets like mortgages, credit card receivables, etc.  Example: A bank offering home loan might round up Rs.20 crore worth of such loans. That pool is then sold to a Government Agency or a government sponsored – enterprise (GSE), or to others to be used as the collateral for the new MBS.  Features of assets to be securitized: The assets to be securitized shall have the following features:- (a) The cash flows generated from the assets should be received periodically in accordance with a Pre – determined schedule. (b) The actual cash flows generated from the assets should be predictable. (...
Post a Comment
Read more

HEDGE FUNDS

By
Hedge means Fence, Barrier & Hurdle (other meaning – Protection & Security). In other words, it is a process of reducing and controlling future risk by taking some steps in advance.  Hedge fund refers to an alternative investment vehicle that is designed to protect investment portfolios from market uncertainty, while generating positive returns in both up and down markets. Hedge funds are unregistered private investment partnerships, funds or pools that may invest and trade in many different markets, strategies and instruments (including securities, non – securities and derivatives) to provide certain periodic and standardized pricing and valuation information to investors.  In short, it is an alternative investment that is designed to protect the Capital (investment amount) of an investor from market uncertainty and generate positive returns from the market fluctuations.  What is Hedging Concept?  Case Study: STEEL INDUSTRY  Facts: An...
Post a Comment
Read more