Mumbai: The Secondary Market Advisory Committee of the Securities and Exchange Board of India (SEBI) is likely to meet on May 7 to review the recent changes made to the futures and options segment. According to a report in NDTV Profit, the committee is likely to discuss whether the curbs introduced in the past few months have had the desired effect on market activity.
While the full agenda of the meeting is not yet public, the report said that some of the goals of the new rules have already started showing results. Therefore, they believe that SEBI is unlikely to introduce any further curbs or strict regulations in the futures and options space for now.
One of the key proposals that SEBI had made on February 25 was to change the way open interest (OI) is calculated in the equity derivatives market. The regulator had suggested moving from the traditional notional value-based method to a ‘Future Equivalent’ method.
This change was aimed at reducing the chances of stock price manipulation and avoiding unnecessary trading bans on certain stocks. SEBI had also proposed changes to the market-wide position limits (MWPL), which control how much trading can take place in a particular stock’s futures and options contracts.
Back in October last year, SEBI had already brought in a number of new rules to manage rising volumes in the futures and options segment. These included limiting weekly options expiry to one per exchange, collecting premiums from options buyers upfront, tightening intraday monitoring, changing contract sizes, and ensuring safer trading practices on expiry days.
There has also been discussion around whether retail investors should have to meet a suitability criterion before being allowed to trade in futures and options.
According to earlier reports, this idea had been considered by the SEBI panel. However, the report now say that it may not be taken up in the upcoming meeting, especially because some of the already implemented measures seem to be working.
Leave a Reply