Sebi tweaks entry and exit rules for stocks in derivatives segment. Here are the details

The market regulator stated that it had reviewed the criteria to ensure that only high-quality stocks with enough market depth were traded in the derivatives market.

Riya R Alex
Updated31 Aug 2024, 06:14 AM IST
Sebi has laid down new criteria to enter and exit the F&O market.
Sebi has laid down new criteria to enter and exit the F&O market.

The Securities and Exchange Board of India (Sebi) has revised the criteria for the entry and exit of stocks in the derivatives segment. Under the revised norms, the regulator has raised the median quarter sigma order size (MQSOS) for the previous six months on a rolling basis to 75 lakh from the existing 25 lakh.

The market regulator, in a circular issued on Friday, August 30, stated that it had reviewed the criteria to ensure that only high-quality stocks with enough market depth were traded in the derivatives market. The criteria was last reviewed in 2018, it said.

 

Also Read | Sebi may make regulated entities keep records of stakeholder communications

Revised rules

The regulator has revised a stock’s market-wide position limit (MWPL) for the previous six months to 1,500 crore from 500 crore. 

Sebi has also mandated that a stock’s average daily delivery value in the cash market in the previous six months should not be less than 35 crore on a rolling basis. The current limit is 10 crore.

Also Read | Sebi removes over 15,000 finfluencer sites in crackdown on unregulated entities

Upon its expiry, single stock derivatives are physically settled, unlike index derivatives that are cash settled.

However, the regulator has not changed the criteria for the Average Daily Market Capitalisation and Average Daily Traded Value (ADTV) for the top 500 stocks.

Sebi also stated that the stocks which met the revised eligibility criteria based on the performance of the underlying cash market, will be allowed to enter the derivatives market.

 

Also Read | FPIs to receive funds on settlement day starting October: Sebi whole time member

If any stock in the derivatives markets does not meet this criteria for three months continuously on a rolling basis, based on the data for the previous six months, it will have to leave the derivatives market. Additionally, no new contract will be issued.

Sebi also mentioned that unexpired contracts can be allowed to trade until the expiry of term and new strikes may also be introduced in the existing contract months.

The revised exit criteria will apply only to stocks that have been in existence for 6 months or more from the date of introduction.

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First Published:31 Aug 2024, 06:14 AM IST
Business NewsMarketsSebi tweaks entry and exit rules for stocks in derivatives segment. Here are the details

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