Data to pose problems in SEBI’s analysis attempts

Author: Neha Dhamija

After SEBI’s appeal to help it gather data on short-selling by Foreign Institutionals, only 17 out of the total registered number of 250 have so far come up with the values. The actual total amount is estimated to be $2billion in absolute terms or fifth of the aggregate selling by FIIs.

Of these, about 50 are brokers registered as FIIs and active participants of lending and borrowings. The data at hand covers only 33 percent of the P-notes issuing FIIs that give way to short-selling. The ones who do this often are Goldman Sachs, J P Morgan, Morgan Stanley, Merrill Lynch.
	Need to have data related to short-selling came up because this phenomenon is being touted as a major factor to cause sinking of Indian stock markets. The procedure of off-shore selling is: FIIs lend stocks to party who wishes to take a short position in the market, by having the shares from another player. Derivative contracts, in written are passed on to both the parties. Then, the stock kept for party one of the parties is sold on behalf of the other party (the one that wants to have a short position in the market). This act is believed to pull the stocks downwards. So, the escape route is to somehow recover the $2billion amount.