MUMBAI, July 15: In a bid to impart greater transparency and put an end to price rigging, the Securities and Exchange Board of India (SEBI) has proposed a new set of guidelines relating to bulk/negotiated deals (NDs) in the stock market.A committee was constituted by SEBI to study the existing procedures relating ND and after extensive deliberations, a set of guidelines has been framed for regulating NDs in the capital market. A negotiated deal has been defined as any transaction executed at a price not formed through the stock exchange price and order matching mechanism.According to Bombay Stock Exchange sources, the SEBI was prompted to bring in new guidelines after it was found that many brokers were misusing negotiated deals for price rigging. "Using the old norms, many brokers avoided margins and shifted positions from broker to broker. Share prices of BPL, Sterlite and Videocon were manipulated through the negotiated deal route. As per the new norms, this will not be possible," said abroker.According to the SEBI, the size of transaction should satisfy either of the following criteria: transaction value of Rs 25 lakh or transaction volume of 10,000 shares. "The transaction should be reported within 15 minutes of trading being negotiated. Stock exchanges would prescribe stringent penalties for violations of the reporting requirement. Any transactions after the trading hours of the exchange would be reported immediately on the next trading day at the start of the market hours," said a SEBI circular. This move will restrict unofficial kerb deals.It may be recalled that when the exchanges faced a payment crisis recently, BSE brokers used the negotiated deal method (in the old form) and transferred the liability to other brokers.SEBI said cancellation of transactions should also be reported in a similar manner within the specified time-frame along with reasons for such cancellation. "The exchange should make arrangements for dissemination of information relating to the execution ofsuch a transaction and any changes to the investing fraternity immediately. The information should be readily retrievable at any time for the convenience of the investing fraternity," it said.On the exposure to the market, SEBI said the sell order of the ND would be exposed to the market for exactly ten minutes in the market, so that any buyer from the market can offer a better quote by giving at least a 5 per cent higher buy quote. In case there are no quotes from the market, then the parties to the ND would go ahead with the deal and conditions. If there is a quote offered by a buyer in the market, then the ND would go through in the normal segment of the market and would thus abide by the procedures of clearing and settlement of the exchange.
