MONEY
SEBI unveils new measures to check volatility in F&O trade and protect investors
- IBJ Bureau
- Jul 31, 2024
Capital markets regulator Securities and Exchange Board of India (SEBI) has proposed new measures in an attempt to protect investors and maintain market stability in the booming derivatives market.
On Tuesday, the SEBI proposed seven steps, including increasing the minimum contract size for F&O to Rs 20 lakh and limiting weekly option contracts.
It highlighted that 92.5 lakh retail traders and proprietorship firms incurred a trading loss of Rs 51,689 crore in FY24. The SEBI issued a consultation paper on measures to strengthen the index derivatives framework for increased investors’ protection and market stability.
The SEBI proposed to revise the minimum contract size for index derivatives contracts in a phased manner. The minimum value of the derivatives contract at the time of induction is proposed to be between Rs 15 lakh and Rs 20 lakh. After six months, the minimum value will be between Rs 20 lakh and Rs 30 lakh.
At present, the minimum contract size requirement for derivative contracts is Rs 5 lakh to Rs 10 lakh, last set in 2015.
The SEBI has also suggested reducing weekly option contracts. Currently, there are index-based contracts that expire every day. The markets watchdog is proposing to allow weekly contracts of one index of an exchange. Once approved, there will be two expiries every week.
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