Markets regulator Securities and Exchange Board of India (SEBI) is considering a uniform system for stock exchanges to accept orders during the pre-open session, after finding differences in the way NSE, BSE and Metropolitan Stock Exchange (MSE) currently handle them.
Under the proposed system, all exchanges will follow the same process. First, the exchange will check whether the investor has sufficient margin. Only after the margin is confirmed will the order be displayed in the order book. However, the order will retain the time stamp of when it was originally received by the exchange, and not when the margin check was completed.
For example, if an investor places an order at 9:00 AM but the margin check is completed at 9:00:02 AM, the order will still carry the 9:00 AM time stamp and will be in order que accordingly.
One market participant aware of the ongoing discussions said, “Although traders had not raised any major concerns, SEBI is of the view that the existing process has the potential for misuse and has therefore decided to tweak it”.
The review was necessary because different exchanges were following different processes for accepting orders. An investor placing orders on multiple exchanges at the same time could consequently receive different time stamps and different order priorities. The time taken for margin verification can also vary depending on whether the clearing corporation is located within the exchange premises or operates from a separate location.