SEBI proposes standardised options strike-price framework for smoother trading
Synopsis
SEBI wants exchanges to stop letting volatile markets strand options traders without usable contracts. Its new consultation paper mandates dynamic, intraday strike-price additions and periodic removal of stale strikes — a structural fix for a long-standing gap in India's booming derivatives market. Comments close 15 June.
Key Takeaways
SEBI released a consultation paper on 25 May proposing a standardised framework for options strike-price management .
Exchanges must maintain a minimum number of in-the-money and out-of-the-money strikes and introduce new ones intraday during sharp market moves.
No system changes will be required from stock brokers or market participants during live market operations.
Exchanges retain discretion over strike intervals, minimum contract counts , and framework details, which must be published on their websites.
The rules cover equity, currency, and commodity derivatives segments.
Public comments are invited until 15 June .
The Securities and Exchange Board of India (SEBI) on Monday, 25 May released a consultation paper proposing a standardised framework for managing options contract strike prices, aimed at ensuring suitable contracts remain available near prevailing market levels even during sharp intraday price swings. The move is designed to strengthen trading continuity and ease of doing business across India's derivatives markets.
What SEBI Is Proposing
The regulator has proposed that stock exchanges maintain a minimum number of in-the-money and out-of-the-money strike prices around the current market price at all times. Exchanges would be required to conduct daily reviews and introduce new strike prices intraday in the direction of market movements — without requiring any system changes at the broker or participant level during live market hours.
SEBI also proposes the periodic removal of strike prices that drift far from current market levels, a step the regulator says will improve operational efficiency and reduce clutter in the options chain.
Flexibility Left to Exchanges
The operationalisation of the new framework will be at the discretion of individual stock exchanges, including decisions on whether to keep larger strike intervals for contracts away from the prevailing market price, and the minimum number of options contracts to be issued. Exchanges will be required to publish the framework on their websites and review it periodically in consultation with market participants, according to the consultation paper.
'Stock exchanges shall publish such framework on their website and review the framework periodically in consultation with market participants,' the consultation paper stated.
Segments Covered
The proposed rules will apply across equity, currency, and commodity derivatives segments — covering the full breadth of India's exchange-traded options market. This broad scope signals SEBI's intent to bring uniform standards to a market that has seen explosive growth in retail participation, particularly in weekly index options.
Why It Matters
A strike price is the pre-determined level at which an options contract can be exercised. When markets move sharply, inadequate availability of strikes near the current price can leave traders without viable contracts, forcing them to either exit positions at unfavourable terms or sit out volatile moves entirely. This is the first time SEBI has proposed a comprehensive, exchange-level mandate for dynamic strike management — a gap that market participants have flagged for years.
This comes amid a broader SEBI push to rationalise the derivatives ecosystem, following earlier measures in 2024 that restricted weekly expiry contracts and raised lot sizes. Public comments on the latest proposal are open until 15 June.
Point of View
But the devil is in the discretion. By leaving key parameters — strike intervals, minimum contract counts — to individual exchanges, the regulator risks replicating the very inconsistency it is trying to fix. NSE and BSE have historically diverged on derivatives design, and without minimum binding standards, a 'comprehensive framework' could mean different things on different platforms. The timing also matters: this follows SEBI's 2024 clampdown on weekly expiries, which was meant to curb retail speculation. A more accessible strike ladder could partially offset that friction — or reignite it. SEBI will need to watch participation data carefully after implementation.
NationPress
10 Jul 2026
Frequently Asked Questions
What is SEBI's proposed options strike-price framework?
SEBI has proposed a standardised system requiring stock exchanges to maintain a minimum number of in-the-money and out-of-the-money strike prices near the prevailing market level and to add new strikes intraday during sharp price movements. The proposal, released on 25 May, also calls for periodic removal of strikes far from current market levels to improve efficiency.
Why is SEBI introducing this framework?
When markets move sharply, a lack of available strike prices near the current level can leave options traders without suitable contracts to trade. SEBI's framework aims to ensure continuous availability of relevant strikes, improving trading continuity and ease of doing business in derivatives markets.
Which market segments will the new rules apply to?
The proposed framework will apply across equity, currency, and commodity derivatives segments on Indian stock exchanges, covering the full range of exchange-traded options.
Will brokers need to update their systems to comply?
No. SEBI has specified that the intraday introduction of new strike prices will not require any system changes from stock brokers or market participants during live market operations.
When is the deadline to submit comments on SEBI's proposal?
SEBI has invited public comments on the consultation paper until 15 June 2025. After reviewing responses, the regulator is expected to finalise and notify the framework to exchanges.
