Airport operators, particularly the Airports Authority of India, had seized several aircraft of the Vijay Mallya-owned carrier and decided not to release them till Kingfisher clears their dues
The cash segment is possibly the most important part of equities market. However, SEBI and BSE are paying less attention to it
The Securities and Exchange Board of India (SEBI)’s recent directive for opening a separate trading window for the so-called ‘illiquid’ shares may reduce the liquidity of cash segment where the bulk of trading takes place, according to experts.
It is estimated that there are more than 2,100 so called 'illiquid' scrips trading on BSE as of December 2012. This number is likely to go up over 60% or over 3,000 scrips listed on BSE, once SEBI's directive is enforced from 1st April. Irony is some of these companies may even be good companies!
Nevertheless, this is not all. Exchanges, backed by the regulator, are simply gunning for more derivatives business rather than attracting retail investors and keeping the cash segment healthy and safe).
In a surprise move last year, SEBI issued a circular, permitting stock exchanges to boost liquidity in the derivative segment. “In consultation with BSE, MCX-SX, NSE and USE, it has been decided to permit Stock Exchanges to introduce one or more liquidity enhancement schemes (LES) to enhance liquidity of illiquid securities in their equity derivatives segments,” the circular said.
It is pertinent to note that volumes in the derivative segment have only grown to astounding heights since futures & options (F&O) segment was introduced to the market. Almost 80% of incremental volumes come from options and almost all of it happens in the National Stock Exchange.
To compete with NSE, BSE is currently running its 9th series of LEIPS or Liquidity Enhancement Incentive Programme, which focuses on SENSEX futures contracts (which indirectly has been linked to only Sensex stocks). The whole idea of this is to incentivise market makers (MMs) and general market participants (GMPs) like stock brokers and institutions to trade in the F&O segments comprising the index and bring in more revenue for the exchange.
The recent circular from SEBI stated, “The programme incentivizes both Market Makers (MMs) and General Market Participants (GMPs) by payment of cash for their participation as per prescribed terms and conditions.”
A look at the terms and conditions of the LEIPS XI programme, shows that market makers stand to gain Rs1,800, from BSE, for every Rs1 crore transacted in the futures market.
Market experts say that turnover for the derivative segment is meaningless without a robust cash segment.
BSE houses several thousands of micro- and small-cap companies that are present in the cash segment. While many of these companies are fraudulent or are “operator-driven” stocks, there are some genuine ones out there as well: family businesses and small-scale entrepreneurs who have tapped primary market to raise cash in the past. These companies would be stigmatised if moved to a separate window.
Earlier we had written a story about how SEBI's idea to shoo away equity investors in order to curb manipulation which is rampant. Click here for the story.
Jayalalithaa said the Tamil Nadu government would permit IPL matches only if the organisers provide an undertaking that no Sri Lankan players, umpires, officials or support staff would participate in these matches
The Indian Premier League (IPL)'s sixth edition appears to have hit a political storm in Tamil Nadu as the state chief minister denied permission to allow cricket matches if the teams have players from Sri Lanka.
Amidst the protest supporting Tamilians in the island nation, TN chief minister J Jalyalalithaa, said the IPL matches would be permitted in Tamil Nadu only if there are no Sri Lankan players, umpires, officials or support staff involved in the game.
“In view of the popular antipathy and anger in the state against the actions of the government of Sri Lanka, the government of Tamil Nadu is of the view that IPL matches involving Sri Lankan players, umpires and other officials should not be played in Tamil Nadu,” she said.
In a letter sent to prime minister Manmohan Singh, she said the Board of Control for Cricket in India (BCCI) may be advised by the Centre to prevail upon the IPL organisers not to allow Sri Lankan players, officials, umpires and support staff to take part in the tournament in the state.
Jayalalithaa said the state government would permit IPL matches in Tamil Nadu only if the organisers provide an undertaking that no Sri Lankan players, umpires, officials or support staff would participate in these matches.