The broker will transfer the money to a bank account designated for this. The fund cannot be adjusted against debit in the account.
Based on defined objective criteria, the exchanges publish the list from time to time.
The regulator and the exchanges have adopted parameters and quantitative formula to define the concentration of selling, and after analysing them, the bourses put out the watch list, said the source cited above.
In June, the stock exchanges introduced new categories of lists — information and due diligence. Earlier, there were the historical watch list and current watch list.
On the information list there are 45 stocks, of which 19 are on the watch list, which is a subset of the first.
Among the 19 are scrips such as Adani Gas, Alembic, Delta Corp, Edelweiss Financial Services, India Cements, ITI, IRB Infrastructure, Mastek, and IRCTC.
However, due to there being some prominent names, brokers
are facing challenges because this is causing inconvenience to genuine investors.
“Unless a qualitative check is done, people may act against good companies also. So, the exchanges must run these through filters while circulating this list. Or else putting the onus on members will lead to disputes and will be unfair also,” said a broker.
Another broker is of the view that the regulator should not use margins to penalise brokers, because there is no definition of concentrated selling and it is typically left to the judgement of the trading member.
Not complying with rules may attract more action, such as special inspection, levying additional margins (up to 25 per cent), and disciplinary actions.