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TMI BlogPre-trade Risk ControlsX X X X Extracts X X X X X X X X Extracts X X X X ..... above, SEBI engaged in a consultative process with the market participants, stock exchanges, its Risk Management Review Committee (RMRC) and Technical Advisory Committee (TAC). Global practices in this regard were also studied. 4. Pursuant to the above, it has been decided to prescribe a framework of dynamic trade based price checks to prevent aberrant orders or uncontrolled trades. These measures would be implemented in phases in order to ensure the Indian stock exchanges deploy latest technology while maintaining adequate controls. As an initial measure, it has been decided that stock exchanges shall implement the measures as given below. Order-level checks 5. Minimum pre-trade risk controls for all categories of orders placed on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June 28, 2001, stock exchanges had been advised to implement appropriate individual scrip wise price bands in either direction, for all scrips in the compulsory rolling settlement except for the scrips on which derivatives products are available or scrips included in indices on which derivatives products are available. For scrips excluded from the requirement of price bands, stock exchanges have implemented a mechanism of dynamic price bands (commonly known as dummy filters or operating range) which prevents acceptance of orders for execution that are placed beyond the price limits set by the stock exchanges. Such dynamic price bands are relaxed by the stock exchanges as and when a market-wide trend is observed in either direction. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oker is lower than 90% utilization level. 8 Stock exchanges may prescribe more stringent norms based on their assessment, if desired. 9 Stock exchanges are directed to: (a) take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant byelaws, rules and regulations, within one month from the issuance of the circular and with atleast one week advance notice to the market; (b) bring the provisions of this circular to the notice of the stock brokers and also disseminate the same on its website; (c) communicate to SEBI the status of implementation of the provisions of this circular. 10 This circular is being issued in exercise of powers conferred under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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