What’s in the news?

• The Securities and Exchange Board of India (SEBI) is considering a major revamp of short-selling regulations.

What is short selling?

• Short selling in the stock market refers to the practice wherein an investor sells borrowed shares with the anticipation that the stock price will decline in the future. 
• The process involves the investor borrowing shares from a broker, selling them at the current market price, and then buying them back at a later time, ideally at a lower price, to return them to the lender. 
• The difference between the selling and buying prices represents the profit or loss for the investor. 
• Short selling can be a speculative strategy for traders who believe that certain stocks are overvalued or will underperform in the near term. However, it also carries significant risks, as there is no limit to the potential loss if the stock price rises unexpectedly. 
• To regulate this practice and maintain market stability, stock exchanges and regulatory authorities like SEBI impose certain restrictions and disclosure requirements on short selling activities.

https://www.thehindubusinessline.com/markets/sebi-may-ease-short-selling-norms/article69313101.ece