Mechanism to prevent reversal trades not applicable to equity derivatives segment: BSE

The BSE on Friday announced that the mechanism that automatically cancels reversal trades will not be applicable to the equity derivatives segment "until further notice". The exchange introduced the mechanism -- Reversal Trade Prevention Check (RTPC) -- in its equity derivatives segment in March 2016.

It was introduced with an intention to prevent potential cases of trade reversal taking place on the trading platform. It acts as a preventive measure wherein the second leg of a potential reversal trade will automatically be cancelled by the trading system at the time of order matching in an online real-time manner. "Reversal Trade Prevention Check (RTPC) in equity derivatives segment, it is to inform that the said Check shall not be applicable until further notice," BSE said in a circular.

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 that takes place during the day for the same quantity between the same set of broker/clients and vice-versa.