Auto-Cancellation of Reversal Trades in BSE

IAS Prelims 2023

BSE is planning to soon introduce a mechanism that will automatically cancel reversal trades executed on its platform.

‘Auto-Cancellation of Reversal Trades’ would focus on prevention of reversal trades on the exchange trading platform.

current affairsIn this measure, the second leg of a reversal trade shall be automatically cancelled by the exchange.

The implementation plan of the said functionality shall be communicated shortly to ensure safety of the securities markets.

Reversal of trade implies that for a buy transaction initially entered into by a broker for a particular client for a specific quantity, there is a corresponding sale transaction which takes place during the day for the same quantity between the same set of broker/clients and vice-versa.

Earlier, BSE had implemented self-trade prevention check (STPC) functionality and periodic price bands to curb manipulation in the capital markets.