Rule 21 in the Stock Market

Stock Exchange applies Rule 21 upon the investors/traders in various forms. NSE/BSE (exchange) can suspend/revoke the trading privileges, or even impose a fine. Further, the exchange can submit the case to the regulating agencies for an investigation, and later subject it to legal action if necessary.  

Rule 21 Features:

The Rule 21 gives authority to the Stock Exchange to investigate and take appropriate actions upon those violating the rules and regulations. 

Rule 21 features to prevent fraudulent or manipulations in trading that may fragment the stock market integrity.

The Rule 21 specifically defines what does market manipulation mean? An investor/trader can initiate to influence price or volume of an asset, causing a disarray in the trading scenario. 

One can resort to several ways and means in creating a disarray by spreading false information, insider trading, creation of momentary demand/supply. 

The financial regulator assigns the authority to stock markets for the imposition of Rule 21 to maintain two important aspects intact. 

First, prevention of scrupulous elements causing harm to individual investors/traders. 

Second, taking legal action against the individuals to maintain the overall integrity of the stock markets.