Over 2,000 stocks, most illiquid, will trade via a separate window on the stock exchanges from Monday. Trading in these stocks will take place via periodic call auction sessions.
This activity is being carried out so that the trading members exercise additional due diligence while trading in these securities either on their own account or on behalf of their clients, BSE said in a statement.
The list of illiquid stocks is based on criteria jointly agreed among the Bombay Stock Exchange, the National Stock Exchange and market regulator Securities and Exchange Board of India (Sebi). The list will available to the trading members on a quarterly basis.
A total of 1,807 of such stocks are listed only on the BSE, while 20 stocks are listed only on the NSE. 243 stocks are listed on both the exchanges.
Barring Bannari Sugar, none of these stocks are a part of the BSE-500 or CNX-500 benchmarks.
Defining illiquid stocks:
These are stocks that cannot be easily sold or exchanged for cash without a substantial loss in value. Stocks with average daily trading volume of less than 10,000 in a quarter or if average daily number of trades is less than 50 in a quarter will be classified as illiquid stocks. A scrip will be classified as illiquid at all exchanges where it is traded.
Notice to markets:
The exchanges will identify illiquid scrips at the start of every quarter. Two days of notice shall be given for entry and exit of stocks.
Session duration and trading:
Periodic call auction sessions of one hour each will take place with the first session starting at 9:30 a.m. 45 minutes will be for order entry/modification/cancellation, while 8 minutes will be for order matching and trade confirmation. The remaining 7 minutes will be a buffer period.
Un-matched orders at the end of a session will be purged. A maximum price band of 20 per cent is applicable. If Market Wide Index Circuit Breaker comes into force such sessions will be cancelled and all orders will be purged.
In the event where maximum of buy price entered by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected shall be deposited to Investor Protection Fund.
Penalty for each such instance per session will be higher of the following:
i) 0.50 per cent of the trade value for sale and 0.50 per cent of trade value for the buy, resulting in 1 per cent penalty for the client on PAN basis.
ii) Rs 2,500 for the buy trade and Rs 2,500 for the sell trade, resulting in penalty of Rs 5,000 for the client on PAN basis.