Top stock exchange BSE has decided to implement self-trade prevention checks (STPCs) for institutional investors trading in its equity and currency derivatives segments from January 18.
So far, the checks were not applicable to institutional investors.
The mechanism will be made applicable on the basis of permanent account number (PAN) details of investors.
Using PAN details, the checks would help prevent matching between a buy and a sell order of an institutional investor placed by different members in the same order book.
“Currently, self-trade prevention check is not applicable for ‘INST’ client type on both sides of the trade,” BSE said in a notification.
“Going ahead, it shall now be made applicable on the basis of PAN of the client available in exchange records,” BSE added.
INST client type indicates an institutional client order, according to BSE rules. These investors include mutual funds, foreign institutions, insurance firms and hedge funds.
BSE also said all other characteristics of the STPC mechanism will continue to be applicable. The mechanism will be made live in the currency and equity derivatives on BSE.
The stock exchange had asked brokers to verify the PAN details of clients registered in the exchange’s UCC (Unique Client Code) system.
PAN-based self-trade prevention checks were introduced by BSE in its equity derivative segment in 2015.
Self-trades do not result in change of ownership as the buyer and the seller are the same.
Capital markets regulator Sebi takes action against those entities that indulge in these activities with malafide intent under its ‘Prohibition of Fraudulent and Unfair Trade Practices’ norms.