This circular issued by SEBI (Securities and Exchange Board of India) outlines several measures to strengthen the equity index derivatives framework for better investor protection and market stability.
Upfront Collection of Option Premium (Effective February 1, 2025): To discourage leverage and mitigate risk, Trading/Clearing Members are required to collect option premiums from buyers upfront.
Removal of Calendar Spread Treatment on Expiry Day (Effective February 1, 2025): The benefit of offsetting positions (calendar spread) will not be available on the day of contract expiry due to heightened risk on expiry days.
Intraday Monitoring of Position Limits (Effective April 1, 2025): Stock Exchanges will take at least four random intraday snapshots to monitor position limits, ensuring positions do not exceed permissible limits.
Revised Contract Size for Index Derivatives (Effective November 20, 2024): The minimum contract value for index derivatives is raised to ₹15 lakhs, to ensure that higher-value contracts maintain the risk profile of participants.
Rationalization of Weekly Index Derivatives (Effective November 20, 2024): Exchanges will now offer weekly expiry index derivatives for only one benchmark index, reducing speculative trading.
Increase in Tail Risk Coverage on Expiry Day (Effective November 20, 2024): An additional 2% Extreme Loss Margin (ELM) will be levied on short option contracts on the day of their expiry.
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