Sebi new rules: Market regulator SEBI has introduced new risk norms in view of increasing speculation in the F&O market. Based on a advisory letter released in February, there will now be major changes in the calculation of open interest, position limit and termination rules. These changes have been made aimed at reducing the deficit of retail traders. SEBI wants to limit commercial activities but at the same time maintaining liquidity in the market is also important. The new rules will curb betting and retail traders will also get an opportunity to better understand their risks.
1. Count of Open Interest (OI): Future equivalent and delta -based models will be applied. With this, the prices of derivatives will be linked to Aadhaar securities, so that the appropriate situation can be investigated.
2. Total limit of index options: In the consultation paper issued in February, SEBI said that this limit would be Rs 10 lakh. It should be 1,500 crores. However, after the industry’s response, it was increased to Rs 100. A provision of Rs 10,000 crore has been made.
3. MWPL (Market-Wide Position Limit) on single stock: It will now be set on “15%of free float” or “65 times the average daily delivery value” – whatever is low. MWPL is limited to 30% for FPI and mutual funds. MWPL is a maximum of 10% for retail investors.
4. Expiry date: Preparations are underway to change the expiration date. Now F&O expiry will be valid only two days a week. SEBI approval will be necessary for changes in expiration date. This will have an impact on new exchange players such as Metropolitan Stock Exchange.
F&O market trends
According to an old SEBI survey (2021–24), 93% individual traders suffered losses in F&O. Although the index option volume has fallen by 15% year-on-year, it is 11% higher than in 2022. Personal participation has also declined by 5% year-on-year, but still saw an increase of 34% compared to 2022.
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