The Hindu Business Line : BSE shifts over 600 cos to `Z' category

IN an effort to curb stock price manipulation in illiquid and small cap stocks, BSE has put over 600 companies stock in `Z' category, a segment on the exchange that is mainly for companies that are not complying with various regulations of the stock exchanges.

In addition, NSE has decided to move over 100 companies stock into the trade-to-trade segment. The companies shifted by BSE in Z category are also under trade-to-trade.

In the trade-to-trade segment, investors cannot square off their position on the same day. It means that if an investor has bought 1,000 shares of a company and want to sell the same quantity on the same day than he has to pay for the 1,000 shares and also deliver them on the same day. This is mainly done by the stock exchanges to avoid excessive speculations.

The BSE, in a statement on Monday, said the exchange has shifted 578 companies to the `Z' group or to the trade-to-trade segment with effect from September 10, and 112 companies to the `Z' group with effect from September 12. NSE has shifted 135 companies to trade-to-trade from September 10.

BSE said this is done as an investor-friendly measure and to inform and warn the potential investors about the level of non-compliance of the listing agreement or as a surveillance measure. While NSE said this is done mainly as risk containment measure. In the last few months, several illiquid stocks have seen sharp rise in their stock price.

Stock price of several companies have jumped between 500 per cent and 1000 per cent in just few weeks. This kind of rise was seen mainly in penny stocks that are stock quoting below their par value and do not have strong fundamentals.

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