SEBI to protect investors against stock crashes, harmonise foreign investment flows

The Securities and Exchange Board of India (SEBI) will soon announce measures to protect investors against stock crashes on the bourses. The market regulator is also looking at ways to harmonise the various routes for foreign investment flows.

SEBI's measures follow last month's ''flash crash'' on the National Stock Exchange (NSE) when an erroneous trade worth around $126 million by brokerage Emkay Global Financial Services created panic among traders and sent the stock market index tumbling as much as 15.5 per cent in seconds.

"We are going to take some measures so that there is some pre-check in orders, in pricing and there are some other checks also introduced. We are looking at avoiding similar incidents," SEBI chairman U K Sinha said on the sidelines of a securities market conference in Mumbai.

"We are going to announce some measures based on experts' views. Lapses on the part of any intermediaries will be looked at separately and action will be taken," Sinha said.

Sinha said SEBI was working on systematic improvement while at the same time taking corrective measures against lapses.

He said the decision to discontinue the mini-derivatives contracts was one of the measures taken to safeguard interests of small investors. Also, he said, market data showed that trading in mini contacts were minuscule and it was felt that there might be certain amount of misuse and mis-selling in those contracts.