Tuesday, August 8 2006 10:34 Hrs (IST) - World Time -

Gurgaon: Market regulator SEBI yesterday (Aug 7, 2006) said it would soon come out with a policy statement on short selling of shares.

"You will soon see a policy statement (on the issue)," SEBI Chairman M Damodaran told reporters after inaugurating a week-long Independent Directors' Programme for senior officers of armed forces, organised by the Management Development Institute.

Damodaran, however, refused to divulge whether such a statement will allow short selling by institutional investors or not.

He said unless all issues relating to short sellig are addressed, a decision could not be announced. All those concerned with with the matter are being consulted, Damodaran added.

Short selling stocks without actually owning them or selling them by delivering borrowed stocks is currently permitted for retail investors.

The issue of allowing institutional investors to short sell is linked to the programme for stock lending and borrowing.

The stock lending and borrowing programme was in vogue for institutional investors until 1997 under FERA, which was replaced with FEMA in 1999-2000. Now the issue is whether proposed lending and borrowing programme could be allowed for foreign institutional investors under FEMA.

A revised scheme for lending and borrowing stocks was prepared after the stock markets experienced a huge volatility in May.