Sebi approves stricter norms for inclusion of individual stocks for derivative trading
Sebi on Thursday approved a proposal to tighten rules on the inclusion of stocks in the futures and options(F&O) segment and approved introduction of fixed price for taking a company private.
The revision will lead to addition and deletion of about two dozen stocks.
«In order to ensure that there is a healthy linkage between the cash market and the F&O market many years ago we had brought in a regulation that there will be physical delivery of open positions on expiry, that was the first step we had taken in that direction. The second step that we are taking in that direction is now today, to say that the criteria of which stocks will be committed in the F&O basis the criteria of how their shares trade in the cash segment, we need to adjust those parameters because they were set in 2018 and obviously in the last 6 years the market has grown, volume has grown and size has grown, so those parameters that we had set are no longer appropriate.So, in line with the way market value and volume have grown, we have changed those parameters of eligibility to enter the F&O stocks,» Sebi chief Madhabi Puri Buch said after the board meeting.
The criteria for exit would apply to only those stocks which have completed at least six months from the month of entry into the derivative segment. while for existing stocks in the derivatives segment, the exit criteria on the basis of performance would be applicable three months after the date of issuance of circular, Sebi said.
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