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Tuesday, December 18, 2012

NSE Brokers Told to Limit Orders within 10% of Prevailing Prices


With an aim to check systemic risk from erroneous trades, the National Stock Exchange (NSE) has asked brokers to restrict their trade orders within 10% of the prevailing price of shares and other securities. The proposed move, which would come into force from December 24, follows market regulator Sebi's directives regarding pre-trade controls, which where necessitated after a 900-point flash crash in benchmark Nifty due to an erroneous trade. 
The flash crash that happened on October 5 had halted trading for about 15 minutes, and wiped out nearly . 10 lakh crore of investor wealth. 
"It is hereby notified that as per revised operating policy, the dynamic price bands shall be 10% for stocks on which de
rivatives products are available and on stocks included in indices on which derivatives products are available," NSE said in a circular. 
NSE advised trading members not to place orders beyond the dynamic price bands in force. NSE said that in the event of a market trend in either direction, the dynamic price bands may be relaxed during the day in co-ordination with other exchanges.

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