Sebi Proposes Early Pay-In Benefit Extension to Options Contracts

The Securities and Exchange Board of India (Sebi) has proposed extending the early pay-in facility to options contracts in the commodity derivatives segment, currently available only for futures contracts. This move, aimed at better utilizing certified goods against derivatives contracts, seeks public feedback by May 26.

The Securities and Exchange Board of India (Sebi) has initiated a proposal to expand the early pay-in (EPI) facility in the commodity derivatives market. Currently available only for futures contracts, Sebi intends to extend these benefits to options contracts as well, according to their latest consultation paper issued on Tuesday.

Under this new proposal, clearing corporations would offer the early pay-in option to market participants, enabling them to deposit goods in accredited warehouses against their sold derivatives contracts. This move could potentially exempt market participants from various margin impositions, although mark to market margins would still apply.

The proposal followed stakeholder feedback emphasizing the need to extend the EPI benefit beyond futures to include options contracts. Sebi is actively seeking public comments on this initiative until May 26, signaling a significant potential change in commodity trading processes.