The Bombay Stock Exchange has identified those stocks which are illiquid as per SEBI’s new definition and will move them to a separate trading window which will begin from 8th April. Some well known companies are also in the list
Acting on a recent directive from the Securities and Exchange Board of India (SEBI), the Bombay Stock Exchange (BSE), vide notice 20130401-39, has shortlisted all the ‘illiquid’ stocks and moved them to a separate window which will be traded from 8 April 2013.
The number of such stocks is 2,050 and represents over 50% of the ‘actively’ traded stocks on BSE! Some of the illiquid stocks which maybe familiar to investors include Dr Agarwals Eye Hospital, Asit C Mehta Financial Services, SKP Securities, Almondz Global Securities, Lumax Automotive Systems, Allsec Technologies, Bannari Amman Spinning Mills, Indus Fila, Rane Brake Lining, Rane Engine Valve, Ginni Filaments and Khaitan (India).
As per our analysis on the BSE website, the total number of stocks on BSE is 6,922. Out of this, only 3,888 stocks (including ETFs and such) are ‘active’, while 1,312 stocks are suspended and 1,722 stocks are delisted. The number of so called ‘active’ stocks is little over 50% of the BSE’s entire universe. This means, only 1,838 or just 26.55% of the entire BSE universe will be remaining and actively traded in the ‘normal’ segment of the exchange, if the illiquid stocks are moved to a separate window.
The implications of this move could be far reaching. This will further reduce the number of stocks traded on the exchange, making it difficult for investors to invest in niche or specialised companies (which are normally illiquid).
We had written about this in an earlier post. You can read about it here: Curbing manipulation in illiquid stocks: Another harebrained idea by SEBI?
The illiquid stocks which have been shortlisted will be moved to the “periodic call auction” window from 8 April 2013 onwards, where marketmen can trade on such stocks. The liquidity situation will be monitored by the exchanges every quarter. Every quarter, the exchange will review liquidity and add or remove stocks from the normal segment to the so called “periodic call auction” window where illiquid stocks are traded.
These stocks which are part of the 2,050 illiquid stocks, according to BSE, have failed to meet SEBI’s criteria for meeting definitions of liquidity for the quarter ended March 2013. As per SEBI circular no. CIR/MRD/DP/6/2013 dated 14 February 2013, a scrip is shortlisted as illiquid if all the following conditions are met:
The entire list of 2,050 stocks can be found here: (click here)
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In a reply to a question in the Lok Sabha on 20th March, ministry of external affairs puts the onus of the passport project on TCS; says it is bound to provide services in compliance with 27 stringent service level agreements
While the Master Service Agreement (MSA) is being kept a closely guarded secret despite it being a public document, Preneet Kaur, minister of state in the ministry of external affairs (MEA) has clearly stated in her reply in the Lok Sabha on 20th March, “n terms of the MSA, TCS is bound to provide services in compliance with 27 stringent Service Level Agreements.”
So, what are these 27 service level agreements that the TCS is bound by? Shalini Mathur, Project Head, of Passport Seva Kendra, TCS, in reply to this question states through an email, “I have requested the concerned department in the ministry to respond.”
However, the extensive reply by the minister in the Lok Sabha brings to light the comprehensive role of the TCS. Consider the following:
Kaur concluded that, “The agreement with TCS to operate and maintain the Passport Seva System is valid till 11 June 2018 with provision for its renewal for further two years. The government, therefore, is in no position at present to indicate any future course of action as regards renewal or cancellation of the agreement.”