Indian securities market has banned naked short selling; the impact of this SEBI decision will be felt on Monday's trading day

Following Friday's closing of the stock market, SEBI released a circular. Things like outlawing naked short sales on the Indian stock exchange are highlighted in this circular. As a result, the impact of this SEBI judgement will be evident tomorrow, or on Monday's trading day.

SEBI has prohibited institutional investors from engaging in day trading through the new circular. This circular states that delivering securities at the time of settlement will henceforth be required of all investors.

Furthermore, it has been reported that this circular includes universal rules for taking action against brokers who fail to deliver securities at the time of settlement. The obligations of brokers and exchanges have been discussed extensively in this SEBI circular.

Selling equities that are not with the seller at the moment of trade is known as short selling.

There are also increasing discussions about implementing Security Lending and Borrowing Schemes for short selling. On the other hand, securities traded in futures and options will allow short lending. SEBI will monitor this as well. SEBI will continue to periodically review the list of stocks.

The new circular mandates that institutional investors disclose to the order-placing party whether or not the stock is being shorted. In addition, on the day of the transaction, investors will also need to submit this information by the end of the business day.

Brokers are required to gather data regarding positions that involve short sales. Before the opening of trading hours on the next day, this information and others like it must be given to the stock exchanges.