“Derivatives market allows environment friendly value discovery, improves market liquidity and permits traders to handle threat,” Sebi mentioned in a round.
One of many key adjustments made is how open curiosity will now be measured. As a substitute of simply counting futures and choices contracts, Sebi has requested clearing firms to make use of a brand new technique known as “Future Equal Open Curiosity” or FutEq OI.
This makes use of an idea known as “delta” to calculate how a lot publicity every choice or futures contract truly carries. It provides a extra correct image of the true dangers merchants are taking.
Sebi additionally revised the market extensive place restrict (MWPL), which determines how a lot complete spinoff buying and selling can occur on a specific inventory.
The brand new components now considers each the inventory’s free float and its common each day supply worth. This transformation will scale back pointless “F&O ban” conditions and align spinoff buying and selling extra intently with precise inventory market exercise.One other large change is the therapy of shares that hit the F&O ban. As soon as a inventory enters the ban interval, merchants should now scale back their internet positions every day. They don’t seem to be allowed to extend their publicity even when costs transfer. That is aimed toward curbing manipulation and extreme hypothesis in illiquid counters.For index choices, Sebi has set limits on how a lot anyone dealer can maintain. A dealer can’t exceed Rs 1,500 crore in internet publicity or Rs 10,000 crore in complete lengthy or quick positions.
If anybody crosses this, they need to present that they’ve sufficient money or shares to again these trades or scale back their positions the subsequent day. This rule will include a “grace interval” till December 2025, after which strict monitoring will start.
To additional strengthen oversight, Sebi has instructed inventory exchanges to watch buying and selling exercise not simply on the finish of the day however a number of occasions in the course of the day. Any uncommon spikes in open curiosity shall be flagged and reported.
A brand new pre-open session can be being launched for derivatives, just like the money market, to assist smoother value discovery earlier than the market opens.
(Disclaimer: Suggestions, solutions, views and opinions given by the consultants are their very own. These don’t symbolize the views of Financial Instances)
