SEBI Introduces New Guidelines For Fairness F&O Section To Increase Transparency, Stability

New Delhi: The Securities and Alternate Board of India (SEBI) on Thursday introduced a brand new algorithm for the fairness Futures and Choices (F&O) phase. These adjustments intention to enhance transparency, management extreme hypothesis, and produce extra stability to the market.

One of many main adjustments launched by the SEBI is a brand new methodology for measuring open curiosity (OI) within the fairness F&O phase. Open curiosity refers back to the complete variety of excellent contracts in futures or choices.

The SEBI mentioned it would now carefully monitor the open curiosity ranges through the day, particularly for single inventory futures and choices, as a substitute of ready till the tip of the day. The capital market regulator has additionally determined to hyperlink the market-wide place restrict (MWPL) to the money market quantity and the free float of the inventory.

MWPL is the utmost variety of contracts that may be open in F&O buying and selling for a selected inventory. This transfer is geared toward stopping extreme hypothesis in shares with restricted liquidity.

In one other key measure, the SEBI has elevated the place limits for buying and selling in Index Futures and Index Choices, saying that it desires to strike a steadiness between permitting market individuals to take significant positions in giant indices and avoiding manipulation dangers.

For Index Choices, the online end-of-day place restrict for futures-equivalent open curiosity (FutEq OI) can be Rs 1,500 crore. When it comes to gross positions, neither the lengthy nor the brief facet ought to exceed Rs 10,000 crore.

In terms of Index Futures, place limits will differ by class of individuals. For instance, for International Portfolio Buyers (FPIs) in Class I, mutual funds, and brokers (together with proprietary and shopper trades), the restrict would be the greater of both 15 per cent of the whole futures open curiosity or Rs 500 crore.

For FPIs in Class II — excluding people, household workplaces, and corporates — the restrict would be the greater of 10 per cent of the open curiosity or Rs 500 crore. Brokers, together with their proprietary and shopper accounts mixed, can have an general cap of 15 per cent of open curiosity or Rs 7,500 crore, whichever is decrease.

The SEBI clarified that these limits are along with any holdings the individuals have within the money market or precise inventory holdings. The brand new guidelines are anticipated to make the F&O phase extra clear and environment friendly, whereas additionally holding extreme danger in test.