Stocks
BSE fixes 3,100 point Sensex trigger for trading halt in Q1 2012

According to a statement by BSE, market circuit breakers would be triggered at three stages of the index movement either way at 10%, 15% and 20%. It further said that market-wide circuit breakers would be triggered by the movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier

Mumbai: The Bombay Stock Exchange (BSE) on Friday said trading would halt for the day if the benchmark Sensex moves up or down 20%, or 3,100 points, in a single day for the January-March quarter, reports PTI.

According to a statement by BSE, market circuit breakers would be triggered at three stages of the index movement either way at 10%, 15% and 20%.

It further said that market-wide circuit breakers would be triggered by the movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier.

In case of a 10% or 1,550 points movement either way before 1pm, there would be a one-hour market halt. If it is after 1pm but before 2.30pm, the halt is for half an hour. There will be no trading halt, if Sensex or Nifty moves 10% up or down at or after 2.30pm.

In case of a 15% movement or 2,325 points in index before 1pm, there will be a two-hour market halt. If the 15% trigger level is reached on or after 1pm but before 2pm, there will be a halt of an hour. If this trigger is reached on or after 2pm, the trading will be halted for the remainder of the day.

Further, in case of a 20%, or 3,100-point movement of the index, trading will be halted for the remainder of the day, it said.

The circuit breaker brings about a co-ordinated trading halt in all equity and equity derivative markets nationwide.

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Key economic bills make no headway in Winter Session

The only important financial business that was successfully transacted by Parliament was passage of the third batch of supplementary demands for grants (general) and for Railways and the relevant appropriation bills

New Delhi: Key economic legislations, including the Companies Bill and the pension reforms law, made no headway in the stormy Winter Session of Parliament that ended on Thursday mid-night, reports PTI.

These legislations, which could have played a crucial role in promoting investment and boosting the economic growth, will now have to wait for the Budget Session which is likely to begin sometime in February or March.

While the Companies Bill is seeking to modernise the corporate laws by replacing the Companies Act, 1956, the Pension Fund Regulatory and Development Authority (PFRDA) Bill is aimed at encouraging private and foreign investment in the pension sector.

These legislations, however, could not be taken up for consideration and passage because of stiff opposition by the ruling party ally Trinamool Congress, among other things.

The list of pending legislations includes the Insurance Law Amendment Bill, the Banking Laws Amendment Bill, Direct Taxes Code (DTC) and the constitutional amendment bill to facilitate implementation of Goods and Services Tax (GST).

The only important financial business that was successfully transacted by Parliament was passage of the third batch of supplementary demands for grants (general) and for Railways and the relevant appropriation bills.

The government can also take some credit for getting certain minor legislations like LIC Amendment Bill and Exim Bank Amendment Bill approved during the Session.

The government also introduced the Prevention of Money Laundering (Amendment) Bill, 2011, in the Lok Sabha. It proposes sweeping changes in the procedures relating to attachment and confiscation of property.

As regards the Direct Tax Code and the Bill for Goods and Service Tax, they are still pending with the Standing Committee on Finance, now headed by former finance minister and senior Bharatiya Janata Party leader Yashwant Sinha.

The DTC Bill, which will overhaul the five-decade old Income Tax Act, was introduced in August 2010 and the Bill for GST in the Budget session.

The government needs to take the opposition parties on board, particularly for the GST, since it would require a two-third majority in both Houses of Parliament and ratification by at least half of the state assemblies.

Since the Standing Committee has rejected the proposal to raise foreign direct investment (FDI) limit in private insurance companies from 26% to 49%, it is unlikely that the government will pursue the insurance sector reforms.

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SEBI allows 2 and 5 yr IRFs in G-Secs

“It has been decided to permit the introduction of cash settled futures on two-year and five-year notional coupon bearing Government of India security on currency derivatives segment of stock exchanges,” SEBI said while issuing the guidelines for the new instruments

Mumbai: In order to help investors guard against interest rate fluctuations, capital market regulator Securities and Exchange Board of India (SEBI) today introduced two-year and five-year exchange-traded IRFs (Interest Rate Futures) in government bonds, reports PTI.

“It has now been decided to permit the introduction of cash settled futures on two-year and five-year notional coupon bearing Government of India security on currency derivatives segment of stock exchanges,” SEBI said, issuing the guidelines for the new instruments.

The Reserve Bank of India (RBI), too, has issued notification in this regard.

Earlier, the IRF, traded on currency derivative segment of stock exchanges, was allowed in 91-day treasury bills and 10-year government securities.

Investors purchase or sell IRFs to hedge risks arising from fluctuation in interest rates, which depend on various factors including RBI policy, demand for liquidity and flow of overseas funds.

As per the guidelines, the minimum lot size for such instruments should be Rs2 lakh. Residents and foreign institutional investors (FIIs) can trade in these instruments.

India has an active government securities (G-Secs) market where primary issuance is at market-determined rates.

SEBI further said that in case of foreign institutional investors (FIIs), the total gross long (bought) position in cash and IRF markets taken together should not exceed their individual permissible limit for investment in G-Secs.

In November 2010 monetary review, the RBI had indicated that exchange traded IRFs on five and two-year notional coupon bearing G-Secs and 91-day Treasury Bills would be introduced after taking into account the experiences of cash-settled IRF regimes in other countries.

For hedging interest rate risk, besides the exchange- traded IRF, India also has a liquid and vibrant interest rate swaps (IRS) market.

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