Sebi Updates Rules for Stocks in Derivatives Market

The Securities and Exchange Board of India (Sebi) has announced new rules for including and excluding stocks from the derivatives segment. These changes, effective from August 30, are aimed at ensuring that only high-quality, liquid stocks are traded in this market.

Under the revised guidelines, the median quarter sigma order size (MQSOS) requirement has been increased to ₹75 lakh from ₹25 lakh. This change means that only stocks with higher trading volumes will be eligible for derivatives trading.

Sebi has also raised the market-wide position limit (MWPL) for stocks over the past six months from ₹500 crore to ₹1,500 crore. Additionally, stocks must now have an average daily delivery value of at least ₹35 crore over the past six months, up from the previous limit of ₹10 crore.

The new rules maintain the criteria for Average Daily Market Capitalisation and Average Daily Traded Value (ADTV) for the top 500 stocks. Stocks meeting the updated criteria will be allowed to enter the derivatives market. However, if a stock fails to meet these criteria for three consecutive months, it will be removed from the derivatives segment, and no new contracts will be issued for it. Existing contracts will continue to be traded until their expiration, and new strike prices may be introduced for these contracts.

Sebi last updated these criteria in 2018. The goal of the revision is to ensure that only stocks with sufficient market depth and liquidity are traded in the derivatives market.