SEBI Panel to Evaluate Futures and Options Restrictions in Upcoming May 7 Meeting
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Synopsis
The SEBI Secondary Market Advisory Committee is set to meet on May 7 to evaluate the effectiveness of recent adjustments in the futures and options market, with no new restrictions anticipated.
Key Takeaways
- SEBI meeting scheduled for May 7.
- Review of recent futures and options changes.
- Curbs' effectiveness under discussion.
- Potential no new regulations for now.
- Focus on open interest calculation methods.
Mumbai, April 23 (NationPress) The Secondary Market Advisory Committee of the Securities and Exchange Board of India (SEBI) is anticipated to convene on May 7 to assess the recent modifications implemented in the futures and options sector.
A report from NDTV Profit indicates that the committee will examine whether the restrictions imposed in recent months have achieved the intended impact on market activities.
Although the complete agenda for the meeting has not been disclosed, it has been suggested that some of the objectives of the new regulations have begun to yield positive outcomes.
Consequently, it appears that SEBI is not expected to impose any additional restrictions or stringent regulations in the futures and options domain at this time.
One significant proposal introduced by SEBI on February 25 was to revise the method of calculating open interest (OI) within the equity derivatives market.
The regulator recommended shifting from the conventional notional value-based approach to a 'Future Equivalent' methodology.
This adjustment was intended to minimize the potential for stock price manipulation and to prevent unnecessary trading bans on specific stocks.
SEBI also suggested modifications to the market-wide position limits (MWPL), which regulate the extent of trading permissible in a given stock’s futures and options contracts.
In October of the previous year, SEBI had already implemented several new regulations to manage the escalating volumes in the futures and options sector.
These measures included restricting weekly options expiry to one per exchange, collecting premiums from options purchasers upfront, enhancing intraday monitoring, adjusting contract sizes, and promoting safer trading practices on expiry days.
There has also been a discussion regarding the necessity for retail investors to fulfill a suitability criterion prior to being permitted to trade in futures and options.
According to earlier reports, this notion had been deliberated by the SEBI panel. However, recent updates suggest that this topic may not be addressed in the forthcoming meeting, particularly since some of the already enacted measures appear to be effective.
