Speculation will stop, rules for futures and options trading will be tightened; SEBI's new measures will be implemented from November 20
SEBI: The Securities and Exchange Board of India (SEBI) said in a circular issued on Tuesday, that intra-day monitoring of position limits, rationalization of weekly index derivatives and increase in tail risk coverage will also be implemented. These measures will be implemented in a phased manner from November 20 with the aim of protecting investors and maintaining market stability.
Shiv Ranjani
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Market regulator SEBI laid down stricter norms to rein in speculative trading in futures and options. The minimum contract size has been increased. Upfront of option premium has been made mandatory.
Further, intra-day monitoring of position limits, rationalisation of the weekly index derivatives and increase in tail risk coverage shall also be done, said the Securities and Exchange Board of India, through a circular issued on Tuesday. The steps will be implemented on a gradual basis from November 20 in a bid to safeguard investors and also ensure stability in the markets. The contract size for index derivatives will now be at least Rs 15-20 lakh against Rs 5-10 lakh earlier. As market growth accelerates, so does the aim. It would be correspondingly fixed so that the value of the contract of the derivative is within the range of Rs 15 lakh to Rs 20 lakh on the review date.
Exchanges are allowed to offer derivatives that expire on a weekly basis, based on only one underlying benchmark index. The buyer shall pay the entire premium on option contracts for cover against extreme volatility.
