Only one weekly options contract per exchange, min lot size Rs 20-30 lakh, derivatives panel suggests

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    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.

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    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.

    The recommendations of this panel are to be considered by the Secondary Market Advisory Committee before a final decision is taken.

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    Also read: Kal Ho Na Ho: Sebi Chairperson open to taking some derivative products off the market, says market understands “regulatory risk”

    The rise in derivatives volume in India has been a cause for concern. The SEBI Chairperson recently said that the rise does not pose any systemic risk because of the robust margining system. But while derivatives trading is often scrutinized for its systemic risks, its severe social repercussions are equally concerning.

    There is ample anecdotal evidence indicating that many individuals are borrowing money to trade options, hoping to make a quick profit. This when a SEBI study has found that almost 9 out of 10 retail traders lose money on options bets.

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    Market veterans have also pointed out that most weekly contracts serve no economic benefit as they are used solely for speculation and not what they are actually meant for—hedging.

    In response to a Moneycontrol query, Sebi chairperson Madhabi Puri Buch had said the regulator would be open to taking any derivative products off the shelf if the working committee recommended the same. “We are entirely data-driven. If that’s what needs to be done, and that’s what the committee recommends, and we agree with the logic, we will do it,” she said in a press conference after the last Board Meeting on June 28.

    According to Sebi data, the overall derivative turnover has jumped from Rs 210 trillion in FY18 to Rs 500 trillion in FY24. Overall, the F&O segment has been witnessing growing participation from retail investors in recent years, increasing by more than 40 percent from 65 lakh in FY23 to 96 lakh in FY24. Individual investors in index options jumped from 2 percent in FY18 to 41 percent in FY24.

    Disclaimer: The views and investment tips expressed by investment experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.



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