SEBI FnO Proposals

Orange Lightning

Based on the measures suggested by an expert panel, SEBI has proposed the following measures for adoption by stock exchange, here are some things to know.

1

Rationalisation of Options Strike

SEBI suggests a uniform strike interval near the prevailing index price of 4% around the prevailing price.

2

Upfront Collection of Options Premium

To prevent undue intraday leverage and discourage market practices of allowing positions beyond collateral.

3

Removal of Calendar Spread Benefit

SEBI proposes removing margin benefits for calendar spread positions involving contracts expiring on the same day.

4

Intraday Monitoring of Position Limit

SEBI advises that position limits for index derivative contracts be monitored intraday by clearing corporations/stock exchange.

5

Minimum Contract Size

SEBI proposes increasing the minimum value of derivatives contracts from  Rs 5-10 lakh to Rs 15-20 lakh initially.

6

Rationalising Weekly Options

SEBI suggests limiting weekly options contracts to a single benchmark index per exchange.

7

Increase in Margin Near Contract Expiry

To address high implicit leverage risks near expiry, SEBI recommends increasing the Extreme Loss Margin (ELM) by 3-5%.