Mumbai: India’s stock exchange regulator has asked all listed companies to convert 50% of their non-founder holding to dematerialised form by 31 October to continue trading in the normal segment on stock exchanges.
Trading of securities in companies, which do not meet the new criteria deadline, would happen in the trade for trade (TFT) segment only, the Securities & Exchange Board of India (SEBI) said in a circular.
Trade-for-trade refers to stocks in which trades must be settled on the same day with delivery of securities.
Sebi also said stocks would be traded in the TFT segment for the first 10 days in case of mergers, capital reduction, corporate debt restructuring, securities admitted directly from another exchange, except if the securities are traded in the derivatives segment.
The move would hardly impact trading patterns of big companies, Tarun Sisodia, head of research at Anand Rathi brokerage, told Reuters over the telephone.
“There are small companies and defunct companies, which have a substantial portion of promoter-shares in dematerialised form... the move is for these firms,” he said.
If a company fails to meet the new norm, trading shall take place in TFT segment for the first 10 days with the applicable price band, Sebi said.