MUMBAI: Markets regulator Sebi on Tuesday proposed no less than seven necessary measures – together with a six-fold hike in minimal worth of contracts to Rs 30 lakh – aimed toward curbing speculative buying and selling in index derivatives buying and selling. For a couple of 12 months now, govt functionaries and the market regulator have been warning about extreme hypothesis within the futures & choices (F&O) section of the market that might harm even the economic system.
Inside hours after Sebi chief mentioned {that a} session paper was on its approach to handle the rising issues about extreme rise in F&O volumes, Sebi launched the paper on Tuesday. That is the primary definitive transfer by Sebi to curb the excesses within the house.
Within the session paper Sebi proposed that it intends to extend the minimal dimension of index choices contracts to Rs 15 lakh to Rs 20 lakh within the first part. This might, after six months, go as much as Rs 30 lakh, from Rs 5 lakh now. That is aimed toward curbing merchants who come to the F&O house with a really small quantity of funds.
It additionally proposed that an alternate could be allowed to launch choices contracts which expire each week on just one index. At current an alternate can launch weekly choices on a number of indices, expiring on numerous buying and selling days of the week.
Sebi can be proposing to restrict the entire variety of contracts that each one the shoppers of a big dealer can tackle the day of expiry of F&O contracts. In India, often month-to-month contracts expire on the final Thursday of the month whereas weekly contracts expire on a pre-specified day of the week.
The session paper additionally proposed that brokers ought to acquire choices premium from their shoppers on an upfront foundation. At the moment brokers usually enable their shoppers to leverage their trades utilizing their (brokers’) personal cash on an intra-day foundation. Sebi is proposing to curb this observe.
The regulator can be proposing to restrict the variety of strike costs on the expiry day. Sebi knowledge confirmed that on expiry day a number of trades happen at costs at which the consumers principally lose cash whereas most sellers generate income. Such costs are referred to as out of the cash strike costs. This development signifies excessive types of hypothesis and therefore the Sebi proposal to restrict the variety of strike costs, market gamers mentioned.
Final week the Price range proposed to sharply hike securities transaction tax (STT) on derivatives buying and selling. Within the run as much as the Price range, over the previous few months, the finance minister Nirmala Sitharaman, the Sebi chairperson Madhabi Puri Buch and chief financial advisor to the nation V Anantha Nageswaran, on totally different events had warned concerning the excesses noticed within the F&O buying and selling house.
Inside hours after Sebi chief mentioned {that a} session paper was on its approach to handle the rising issues about extreme rise in F&O volumes, Sebi launched the paper on Tuesday. That is the primary definitive transfer by Sebi to curb the excesses within the house.
Within the session paper Sebi proposed that it intends to extend the minimal dimension of index choices contracts to Rs 15 lakh to Rs 20 lakh within the first part. This might, after six months, go as much as Rs 30 lakh, from Rs 5 lakh now. That is aimed toward curbing merchants who come to the F&O house with a really small quantity of funds.
It additionally proposed that an alternate could be allowed to launch choices contracts which expire each week on just one index. At current an alternate can launch weekly choices on a number of indices, expiring on numerous buying and selling days of the week.
Sebi can be proposing to restrict the entire variety of contracts that each one the shoppers of a big dealer can tackle the day of expiry of F&O contracts. In India, often month-to-month contracts expire on the final Thursday of the month whereas weekly contracts expire on a pre-specified day of the week.
The session paper additionally proposed that brokers ought to acquire choices premium from their shoppers on an upfront foundation. At the moment brokers usually enable their shoppers to leverage their trades utilizing their (brokers’) personal cash on an intra-day foundation. Sebi is proposing to curb this observe.
The regulator can be proposing to restrict the variety of strike costs on the expiry day. Sebi knowledge confirmed that on expiry day a number of trades happen at costs at which the consumers principally lose cash whereas most sellers generate income. Such costs are referred to as out of the cash strike costs. This development signifies excessive types of hypothesis and therefore the Sebi proposal to restrict the variety of strike costs, market gamers mentioned.
Final week the Price range proposed to sharply hike securities transaction tax (STT) on derivatives buying and selling. Within the run as much as the Price range, over the previous few months, the finance minister Nirmala Sitharaman, the Sebi chairperson Madhabi Puri Buch and chief financial advisor to the nation V Anantha Nageswaran, on totally different events had warned concerning the excesses noticed within the F&O buying and selling house.
