Speculators may be the stars in a bull market but in a falling one
they are the villains.
After a precipitous market fall in March led to a default on the
Calcutta bourse and the arrest of a Bombay broker, Indian
regulators decided to accelerate reform of the stock markets. Few
are cheering. The Bombay Stock Exchange 30-share Sensex is down by
one-fifth since early March and the crisis snuffed out trading
volumes. Daily turnover of over Rs100 billion a day in early March
shrank to about a quarter of that by June. Many fear worse is to
come after the reforms are introduced.
Indian stock markets were a curious amalgam of a cash and futures
markets. Speculators thrived on an antiquated settlement system and
only one tenth of trades were actually settled. From July 2 the
cash market will be separated from the futures. Trading in 414 of
the most liquid stocks...
