F&O crackdown: Only one weekly options contract per exchange, min lot size Rs 20-30 lakh, derivatives panel suggests
https://www.moneycontrol.com/news/business/mark...
The Working Committee on Futures and Options has recommended increasing the minimum lot size of derivative contracts to Rs 20 lakh-Rs 30 lakh from Rs 5 lakh presently, restricting weekly options to only one expiry per stock exchange per week, and limiting the number of strike prices for options contracts as key measures to curb the unbridled rise in derivatives volume, sources told Moneycontrol.
Capital market regulator SEBI had appointed an expert working committee last month to address the issue of excessive speculation driven by high retail participation in recent years.
Among the working group’s suggestions, two measures, which if accepted, will have the most impact on volumes. One is the steep increase in contract size, which will make it unaffordable to small-ticket traders, and two, limiting the number of weekly expiries, which will narrow the playing field for traders.
Other proposals include fewer strike prices, upfront collection of option premiums from option buyers, intra-day monitoring of position limits, and further increasing margin requirements closer to expiry, the source said.
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Is it for sellers only or buyers also will be impacted, With the lot size increased!?
It will be certainly a bad move if happens for economy.
What I think is the motive for the committee was to save unaware traders from losses in option trading which somehow got shifted to decreasing volumes in FnO, increasing contract value will surely decrease volumes by somewhat but surely it cannot save the not so smart traders from losses in FnO because they are the ones who don't care of money they put in.
Ignorant traders and investors lose money in many other platforms. It doesn't mean that all such instruments should be made unavailable to all small traders/investors.
Consuming tobacco and liquor harm many people both financially and physically but the government makes these easily available to all with a statutory warning.
The same is sufficient for FnO trading too.
BIG BREAKING News FOR F&O PLAYERS:
SEBI appointed panel has recommended to increase minimum size of derivative contracts to Rs. 20-30 lakh.
Presently its around Rs. 5 lakh only.
Most of the Retailers will be out from F&O now. Brace for impact!
Looks like it’s definitely coming this time.
If this comes true,
1. May be NSE will remove Midcap and FinNifty from the weekly expiry shelf and BSE might stick to Sensex alone.
2. No more daily expiry
3. Volumes will dry quickly which will lead to higher impact cost for active traders.
4. Lower capital traders will be forced to move out from Option Selling.
5. Share prices of all stock Broking firm will start correcting soon as this move directly impacts their revenue.
6. BSE stock price might see significant correction.