Sebi Proposes Stricter Measures to Reform Index Derivatives Framework

Sebi has proposed several measures to overhaul the index derivatives framework, including revising the minimum contract size and collecting option premiums upfront. These efforts aim to curb speculative trading and enhance investor protection. Other proposed measures include rationalizing weekly products, intra-day position limits, and changes in contract expiry margins.

Sebi on Tuesday unveiled a set of measures aimed at strengthening the index derivatives framework. Proposals include revising the minimum contract size and upfront collection of option premiums.

This move targets reducing speculative trades and safeguarding investor interests. Additional recommendations cover rationalizing weekly index products, intra-day position limit monitoring, strike price rationalization, and removing calendar spread benefits on expiry days.

A consultation paper revealed that the minimum contract size will be revised in two phases to bolster market stability and investor protection while facilitating sustained capital formation in the derivatives market.