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The effects of options listing and delisting in a short-sale-constrained market: Evidence from the Indian equities markets

Author

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  • Banerjee, Pradip
  • Chatrath, Arjun
  • Christie-David, Rohan
  • Maitra, Debasish

Abstract

We investigate short- and long-horizon effects of 237 option listings/relistings and 140 delistings in a short-sale-constrained market—specifically, India's National Stock Exchange from 2001 to 2012, when institutional short selling was either curtailed or banned outright. We find a strong positive impact on listings/relistings, signalling a favorable market perception of the event, but a negative impact on delistings. Over long horizons volatility is higher in both listed and delisted periods, especially the latter. We also find evidence to suggest that traders migrate from stock venues to (from) option venues following a listing (delisting), especially during short-sale bans.

Suggested Citation

  • Banerjee, Pradip & Chatrath, Arjun & Christie-David, Rohan & Maitra, Debasish, 2018. "The effects of options listing and delisting in a short-sale-constrained market: Evidence from the Indian equities markets," Global Finance Journal, Elsevier, vol. 35(C), pages 157-169.
    • Handle: RePEc:eee:glofin:v:35:y:2018:i:c:p:157-169
    DOI: 10.1016/j.gfj.2017.10.002
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    3. Sui, Cong & Lung, Peter & Yang, Mo, 2021. "Index option trading and equity volatility: Evidence from the SSE 50 and CSI 500 stocks," International Review of Economics & Finance, Elsevier, vol. 73(C), pages 60-75.

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    More about this item

    Keywords

    Delisting; Relisting; Options; Short sales;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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