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NEW DELHI: The Securities and Exchange Board of India (Sebi) has updated the eligibility criteria for stocks in the Futures and Options (F&O) segment to ensure that only high-quality stocks with adequate market depth can trade in this segment. The eligibility will be determined based on the stock’s performance in the cash market over the past six months on a rolling basis.
Sebi will also consider other factors such as surveillance concerns, ongoing investigations, or other administrative considerations.
The regulator’s circular mandates that the stock’s Median Quarter Sigma Order Size (MQSOS) should now be at least Rs 75 lakh, up from Rs 25 lakh. Moreover, the Market Wide Position Limit (MWPL) has been raised to a minimum of Rs 1,500 crore from Rs 500 crore. The stock’s Average Daily Delivery Value in the cash market has also been substantially increased to at least Rs 35 crore from Rs 10 crore.
Additionally, stocks in the F&O segment that do not meet the criteria for three months in a row on a rolling basis will be eliminated, under the revised guidelines. Furthermore, once these stocks are removed from the F&O segment, no new contracts will be issued for them and it will not be considered for re-inclusion for one year.
However, existing unexpired contracts will be allowed to trade until expiry.
Meanwhile, IIFL identified 23 stock that face the risk to be excluded from the F&O segment based on the updated criteria. These stocks are Laurus Labs (open interest of Rs 1,166 crore) Ramco Cements (Rs 910 crore), Deepak Nitrite (Rs 695 crore), Atul Ltd (Rs 656 crore), Torrent Pharmaceuticals (Rs 652 crore), and Chambal Fertilizers (Rs 640 crore), Gujarat Gas, Coromandel International, Granules India, Sun TV Network, Syngene International, City Union Bank, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Can Fin Homes, Bata India, Dr. Lal PathLabs, Abbott India, United Breweries (UBL), IPCA Laboratories, Metropolis Healthcare, Indiamart Intermesh, Mahanagar Gas (MGL), and JK Cement.
Meanwhile, Zomato, Adani Green, Jio Financial, DMart, and Tata Technologies may be considered for inclusion in the F&O segment.
Stocks that meet the eligibility criteria in the underlying cash market of any stock exchange will be allowed to trade in the equity derivatives segment of all stock exchanges. The derivative contracts will be settled by the clearing corporations at a price calculated based on the volume-weighted average price (VWAP) from the cash segment across all exchanges
Additionally, the market watchdog has introduced a new framework called the product success framework (PSF) specifically for single-stock derivatives.
At least 15 per cent of trading members active in all stock derivatives, or 200 trading members (whichever is lower), must have traded in any derivative contract on the stock being reviewed, on average, each month during the review period, according to the PSF. Also, trading activity must be observed on a minimum of 75 per cent of the trading days within the review period.
The stock under review should maintain an average daily turnover (combining futures and options premium) of at least Rs 75 crore, along with an average daily notional open interest (futures and options combined) of at least Rs 500 crore during the review period.
Sebi will also consider other factors such as surveillance concerns, ongoing investigations, or other administrative considerations.
The regulator’s circular mandates that the stock’s Median Quarter Sigma Order Size (MQSOS) should now be at least Rs 75 lakh, up from Rs 25 lakh. Moreover, the Market Wide Position Limit (MWPL) has been raised to a minimum of Rs 1,500 crore from Rs 500 crore. The stock’s Average Daily Delivery Value in the cash market has also been substantially increased to at least Rs 35 crore from Rs 10 crore.
Additionally, stocks in the F&O segment that do not meet the criteria for three months in a row on a rolling basis will be eliminated, under the revised guidelines. Furthermore, once these stocks are removed from the F&O segment, no new contracts will be issued for them and it will not be considered for re-inclusion for one year.
However, existing unexpired contracts will be allowed to trade until expiry.
Meanwhile, IIFL identified 23 stock that face the risk to be excluded from the F&O segment based on the updated criteria. These stocks are Laurus Labs (open interest of Rs 1,166 crore) Ramco Cements (Rs 910 crore), Deepak Nitrite (Rs 695 crore), Atul Ltd (Rs 656 crore), Torrent Pharmaceuticals (Rs 652 crore), and Chambal Fertilizers (Rs 640 crore), Gujarat Gas, Coromandel International, Granules India, Sun TV Network, Syngene International, City Union Bank, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Can Fin Homes, Bata India, Dr. Lal PathLabs, Abbott India, United Breweries (UBL), IPCA Laboratories, Metropolis Healthcare, Indiamart Intermesh, Mahanagar Gas (MGL), and JK Cement.
Meanwhile, Zomato, Adani Green, Jio Financial, DMart, and Tata Technologies may be considered for inclusion in the F&O segment.
Stocks that meet the eligibility criteria in the underlying cash market of any stock exchange will be allowed to trade in the equity derivatives segment of all stock exchanges. The derivative contracts will be settled by the clearing corporations at a price calculated based on the volume-weighted average price (VWAP) from the cash segment across all exchanges
Additionally, the market watchdog has introduced a new framework called the product success framework (PSF) specifically for single-stock derivatives.
At least 15 per cent of trading members active in all stock derivatives, or 200 trading members (whichever is lower), must have traded in any derivative contract on the stock being reviewed, on average, each month during the review period, according to the PSF. Also, trading activity must be observed on a minimum of 75 per cent of the trading days within the review period.
The stock under review should maintain an average daily turnover (combining futures and options premium) of at least Rs 75 crore, along with an average daily notional open interest (futures and options combined) of at least Rs 500 crore during the review period.