Capital markets regulator Sebi on Friday revised the eligibility standards for entry and exit of shares within the derivatives phase to make sure that solely high-quality shares with ample market are allowed to commerce in such phase.
To be eligible for entry into the derivatives phase, shares should meet sure standards based mostly on their efficiency within the money market over the earlier six months on a rolling foundation.
The inventory’s Median Quarter Sigma Order Measurement (MQSOS) should be a minimum of Rs 75 lakh, revised, from the present Rs 25 lakh and the Market Broad Place Restrict (MWPL) should be a minimum of Rs 1,500 crore, elevated from the current Rs 500 crore as a result of an increase in market capitalisation, Sebi mentioned in round.
Moreover, the inventory’s Common Every day Supply Worth within the money market has been elevated to a minimum of R 35 crore from Rs 10 crore, owing to a big improve within the common day by day supply worth.
Shares, which meet the eligibility standards within the underlying money market of any inventory change, could be permitted to commerce within the fairness derivatives phase of all inventory exchanges.
The inventory exchanges will settle the spinoff contracts at a value calculated by the clearing firms based mostly on volume-weighted common value (VWAP) from the money phase throughout all exchanges.
As well as, different facets like several surveillance issues, ongoing investigations, or different administrative concerns might be taken under consideration by Sebi, whereas contemplating a inventory for introduction into the derivatives phase.
In case, a inventory fails to satisfy these standards for 3 months it is going to exit the derivatives phase. No new contract might be issued on these shares.
Nonetheless, the present unexpired contracts will be allowed to commerce until expiry. As soon as a inventory is excluded from the derivatives phase, it won’t be thought of for re-inclusion for one yr.
“Given the necessity to make sure that solely high-quality shares with ample market depth are allowed to commerce within the derivatives phase and contemplating the expansion witnessed in market parameters because the final evaluation performed in 2018, the eligibility standards for entry/exit of shares in derivatives phase has been revised,” Sebi mentioned.
Additionally, the regulator has launched a product success framework (PSF) for single-stock derivatives.
Below this framework, a minimum of 15 per cent of buying and selling members energetic in all inventory derivatives, or 200 buying and selling members (whichever is decrease), will need to have traded in any spinoff contract on the inventory being reviewed, on common, every month in the course of the evaluation interval.
Moreover, buying and selling should happen on a minimum of 75 per cent of the buying and selling days in the course of the evaluation interval. The inventory must also have a mean day by day turnover (futures and choices premium mixed) of a minimum of Rs 75 crore and a mean day by day notional open curiosity (futures and choices mixed) of a minimum of Rs 500 crore in the course of the evaluation interval.
Sebi famous that spinoff markets improve value discovery and market liquidity.
Nonetheless, with out ample depth within the underlying money market, ample volumes in derivatives markets, and applicable place limits round leveraged derivatives, there will be greater dangers of market manipulation, elevated volatility, and compromised investor safety, it added.
