The Surveillance Department closely monitors the outstanding exposure of Members on a daily basis. For this purpose, it has developed various market monitoring reports. The reports are scrutinized to ascertain whether there is excessive purchase or sale position build up compared to the normal business of the Member, whether there are concentrated purchases or sales, or whether the purchases have been made by inactive or financially weak Members. Even the quality of scrips is considered to assess the quality of exposure. Based on an analysis of the above factors and the margins already paid and the capital deposited by the Member, early pay-in calls are made, if required. Some Members are even advised to reduce their outstanding exposure in the market. Trading restrictions are placed on financially weak Members as and when deemed fit after taking into consideration their past track record. The Department, as such, executes an important risk management function to avert possible payment default of Members by taking timely and corrective measures.

Market Wide Circuit Breakers

The earlier Circuit Filters at individual scrip level used to restrict the movements of indices as well. Now, there are no Circuit Filters on the scrips forming part of popular indices like SENSEX. In order to contain huge price movements of index scrips, SEBI has mandated that Market Wide Circuit Breakers (MWCB) which at 10-15-20% of the movements in either BSE SENSEX or NSE Nifty whichever is breached earlier would be applicable. This would provide a cooling period to the market participants and to assimilate and re-act to the market movements.

The trading halt on all stock exchanges would take place as under;

- In case of a 10% movement in either index, there will be a 1-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1 p.m. but before 2:30 p.m., there will be a trading halt for 1/2 hour. In case the movement takes place at or after 2:30 p.m., there will be no trading halt at the 10% level and the market will continue trading.

- In case of a 15% movement in either index, there will be a 2-hour market halt if the movement takes place before 1:00 p.m. If the 15% trigger is reached on or after 1:00 p.m. but before 2 p.m., there will be a trading halt for 1 hour. If the 15% trigger is reached on or after 2:00 p.m., the trading will halt for the remainder of the day.

- In case of a 20% movement in either index, the trading will halt for the remainder of the day.

The above percentage would be translated into absolute points of the Index variation on a quarterly basis. These absolute points are revised at the end of each quarter

The Market Wide Circuit Breakers at a national level have been introduced in the Indian markets for the first time. This is on the lines of the system prevailing in the US markets.

Individual Scrip Circuit Filters

Circuit Filter of 20% is applicable on all scrips except the scrips on which derivative products are available and are part of indices on which derivative products are available. However, BSE imposes dummy circuit filter on these scrips to avoid punching errors, if any.