Last Updated:
Sebi has actually launched a collection of 6 procedures to enhance the equity index by-products, additionally called F&O structure
SEBI Bhavan at BKC Bandra in Mumbai (PTI/ File Photo)
The Securities and Exchange Board of India (SEBI) has actually recommended 6 essential procedures to suppress extreme supposition in the futures & & alternatives (F&O) sector, readied to work on November 21, 2024. Originally prepared to be executed on November 20, 2024, the brand-new regulations will certainly currently enter pressure on November 21 because of a trading vacation.
Based on responses from market individuals and after an evaluation by a specialist functioning team and the additional market consultatory board, Sebi has actually modified the minimal agreement worth to Rs 15 lakh from the previous variety of Rs 5– 10 lakh. This change will certainly affect the Lot Size of freshly presented F&O agreements, which will certainly currently drop within the Rs 15– 20 lakh array.
Sebi’s October 1, 2024, round defines that acquired agreements will certainly have a minimal worth of Rs 15 lakh at the time of intro, with the Lot Size repaired to guarantee that the agreement worth stays in between Rs 15 lakh to Rs 20 lakh throughout testimonials.
Key Changes in Derivatives Trading:
1. Reduction of Weekly Expiries
Starting today, Sebi will certainly minimize regular expirations for index acquired agreements to one per benchmark index per exchange. This intends to suppress speculative trading and limitation dangers linked to exposed or nude alternative marketing.
2. Increased Contract Sizes
The minimal agreement worth for by-products will certainly enhance from Rs 5-10 lakh to Rs 15 lakh, urging financiers to think better degrees of threat. Going ahead, the agreement worth will certainly be adapted to array in between Rs 15 lakh and Rs 20 lakh.
3. Higher Margin Requirements
To shield financiers from severe market changes, Sebi will certainly enforce an added severe loss margin (ELM) of 2% on all open brief alternatives at expiration. This will certainly boost tail-risk protection, particularly throughout high-volume trading durations.
4. Upfront Collection of Premiums
Effective from February 1, 2025, brokers will certainly be called for to accumulate alternative costs ahead of time. This adjustment intends to dissuade extreme intraday take advantage of and guarantees financiers have enough security to cover their placements.
5. Removal of Calendar Spread Benefits
The technique of schedule spreads– balancing out placements throughout various expirations– will certainly be gotten rid of for agreements ending on the exact same day. This action is planned to minimize speculative trading on expiration days.
6. Intraday Monitoring of Position Limits
Starting April 1, 2025, stock market will certainly start keeping track of placement restrictions for equity index by-products throughout the trading day. This will certainly assist protect against investors from going beyond placement restrictions undetected.
Meanwhile, residential stock exchange are shut today in observation of the Maharashtra Assembly political elections.
