SECURITY AND EXHANGE BOARD OF INDIA [SEBI] HAVE ANNOUNCED NEW REGULATION FOR FUTURES AND OPTIONS TRADING AND ITS EXPERY DAY CHANGES IN 2024

SEBI REGULATIONS in 2024:

 

·        Security and Exchange Board of India have decided to shoot-up the contract size of index derivatives from RS 500,000 – RS 10,00,000

 

·        SEBI have marked to bring down the number of weekly expiry options for index derivatives to increase the market stability.

 

·        SEBI decided to offer the one benchmark indices derivative contracts by each Exchange [NSE & BSE]  

 

·        Also, SEBI applies new rules that “All the brokers to fetch the full option premium upfront from the buyers.

 

·         To control the feverish volatility that regularly happens on the expiry day, SEBI have initiated the extra margin requirements for option sellers by 2% on the expiry day.

 

·        At present, SEBI monitors the position limits for Index derivatives at the end of Trading Day. This make sures that no single Broker can overcame a certain percentage of the total OI [open interest] in the Market. The new rules introduce, Monitoring the Brokers will happen in four random intervals in a trading day.

 

IMPACTS of ABOVE-MENTIONED RULES ON TRADERS:

 

Below are some of the Impacts of the Traders due to new rules by SEBI

1.      Increasing the contract size will not allow the low capital Traders to participate in the Market

2.      Reduce Trading Opportunities

3.      Traders have to constantly manage the positions to avoid exceeding their limits which is Continuously monitored by SEBI and Broker.

IMPACT ON BROKERS:

1.      Revenue impact

2.      Loss of potential clients

3.    Broker may require higher margin deposits from traders

 

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