Mumbai. New rules for future and option trading have come into effect in the stock market from November 20. Since the market is closed today due to election voting in Mumbai, these rules will be applicable from tomorrow (21st November). To control the increasing risks in F&O trading, market regulator SEBI has brought this rule so that the interests of retail investors can be protected. Six important changes have been made to strengthen the equity F&O segment. Let us tell you how future and option trading will change from tomorrow.
Weekly expiry will reduce
SEBI has reduced the number of weekly expiry for index derivative contracts to one index, one expiry. In such a situation, now only Nifty and Sensex will have weekly expiry. Bank Nifty expiry has stopped.
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Increase in contract size
The minimum trading amount for those selling options in the derivatives market will increase from the current Rs 5-10 lakh to Rs 15 lakh. This increase aims to ensure that investors take appropriate risks while participating in the derivatives market.
extreme loss margin
To enhance tail-risk coverage, SEBI will impose an additional Extreme Loss Margin (ELM) of 2 per cent for all open short options on the expiry day. The purpose of this measure is to protect investors from excessive market fluctuations.
Upfront collection of premium
However, this rule will be effective from February 1, 2025. In this, brokers will be required to collect the option premium in advance. The purpose of this change is to discourage excessive intraday borrowing among investors so that they have adequate collateral to cover their positions.
Calendar spread facility will end
The long-standing tradition of calendar spreads – offsetting positions at different expiries – will be eliminated for contracts expiring on the same day. The purpose of this change is to reduce the possibility of large-scale speculative trading on the expiry day.
From April 1 next year, stock exchanges will start intraday monitoring of position limits for equity index derivatives. This means that position limits will be checked multiple times throughout the trading day, reducing traders’ risk.
Tags: business news, Multibagger stock, stock market
FIRST PUBLISHED: November 20, 2024, 16:17 IST
