Motilal Oswal bars intra-day short-selling in non-F&O stocks
Subscribe to enjoy similar stories. Leading financial services firm Motilal Oswal Financial Services will bar its clients from taking intraday short-selling position on stocks that are not part of the futures and options (F&O) segment from Monday. Motilal Oswal Financial Services, with 10.3 lakh clients at the end of January, is the first large brokerage to undertake such a move at a time when the markets have been battered for five straight months.
Short-selling is the practice of selling shares one doesn't own at the time of the transaction. The development comes even as the Sebi-constituted Industry Standards Forum (ISF), comprising exchanges, brokers and other stakeholders, is seeking greater clarity on a regulatory circular on short-selling issued last year, a broker said on the condition of anonymity. Read more: AU Small Finance Bank—weighed down by headwinds, but set for a turnaround Currently, retail investors can short sell a stock only on an intraday basis if they don't own the shares.
Before the close of trading, the sell position has to be closed out if the client doesn't own the shares. Institutional investors who short sell, on the other hand, have to borrow the shares from the exchange's stock lending and borrowing mechanism (SLBM) and give delivery. Motilal Oswal, in a note to its business partners or authorized personnel (APs) on Friday, cited a Sebi circular of 5 January last year that spells out the framework for short selling—selling stocks one doesn't own at the time of the trade.
APs help brokers in onboarding of clients. "We would be restricting the non-F&O stocks for short-selling in intraday product. Same would be effective from 03 March 2025," the firm stated in the note to its business
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