The Securities and Exchange Board of India, on Thursday said that short term selling is not a cause of market meltdown. SEBI Chairman futher added that it would not stop short selling as a regulator at this point of time. 

SEBI Chairman, C. B. Bhave said that banning short term selling is not a part of the solution. Market had continued to decline further despite the ban by some Western countries. Some of these countries have lifted a ban on short term selling as it failed to yield desired results. Indian Stock market faced sharp decline due to collapse of liquidity in the international financial markets and it is not right to blame short term selling. Interestingly, short term selling is already enjoying clean chit from finance ministry.

Mr. Bhave said SEBI has not found any foreign institutional investors (FIIs) guilty of off-shore share lending. FIIs were selling and purchasing share on routine basis as per formal enquiry by regulator. He admitted that mutual fund industry and corporate world is facing fund crunch and low demand. He advised corporates to refrain from buying, owing to not holding sufficient liquidity.

The regulator is providing updated share selling data on its website to bring transparency in the system. It is keeping vigil on the investment pattern of foreign institutional investors. The board has recently tied up with a Malaysian company, which would give access to companies of both countries in their market.