#stockmarketindia #sebi #bearmarket
Short Selling Banned in India:
Do you know in India Short Selling was banned for 6 years? And none other than SEBI passed the order banning it in 2001. Why? All because of the Bear Cartel sitting inside the Bombay Stock Exchange.
SEBI never believed when people use to say that BSE was a club run by brokers for brokers.
However, when in 2001 due to an attack by Bear Cartel Ketan Parekh’s bubble burst, further leading to his arrest, SEBI started to investigate who this hidden Bear Cartel was.
On April 15, SEBI submitted its investigation report to Finance Ministry. The report had shocking details.
The interim showed that together banks, brokers, fund managers and market regulators, were working to rig share prices. SEBI even had a tape of Bombay Stock Exchange(BSE) President Anand Rathi, where he was asking the BSE surveillance department for information on what top brokers/institutions were buying and selling, all market sensitive information.
Further SEBI identified that apart from Anand Rathi, broker Nirmal Bang and R.S. Damani, all are part of the Bear Cartel, taking price-sensitive information and giving it out to run the cartel at a large scale.
All the identified were either banned by SEBI from trading or resigned from BSE.
But this also made SEBI ban short selling as Finance Ministry wasn’t happy with the regulator's failure. Therefore SEBI was advised to not begin Short Selling to the point it does not have a relevant framework to curb illegal cartel activity.
Finally, in Feb 2001, SEBI lifted the ban on short selling with strict rules and regular transparent scrip-wise data over day-to-day shorting to be published by exchanges.
