SEBI has introduced new rules and guidelines for the F&O segment via their circular SEBI/HO/MRD/TPD-1/P/CIR/2024/132 dated 1st October 2024.
In this circular, SEBI has outlined some new rules pertaining to the F&O segment. Some salient points are mentioned below:
1. Upfront Collection of Option Premium: Starting February 2025, trading members must collect the full premium from option buyers to avoid undue leverage.
2. Expiry Day Calendar Spread Treatment: From February 2025, the benefit of offsetting positions in calendar spreads will no longer apply on the expiry day of contracts.
3. Intraday Monitoring of Position Limits: Effective April 2025, stock exchanges will monitor equity index derivative positions multiple times a day to ensure compliance with position limits.
4. Contract Size Adjustment: New index derivatives contracts introduced after November 2024 must have a minimum value of ₹15 lakhs, reflecting market growth.
5. Rationalization of Weekly Index Derivatives: From November 2024, each stock exchange can offer weekly expiring contracts for only one benchmark index.
6. Tail Risk Coverage: Starting November 2024, an additional 2% Extreme Loss Margin (ELM) will be levied on short options expiring on the day.
Informed investors should familiarise themselves with the contents of the circular to ascertain how it will affect their investing activities.
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