The Securities and Exchange Board of India has proposed new measures in a move to increase investor protection and market stability in the booming derivatives market, including mandating the upfront collection of options premiums from buyers by trading members and clearing members.

At present, there is no explicit requirement for upfront collection of options premiums from buyers, although margins are collected for futures positions and short options positions.

The market regulator is also mulling to revise the minimum contract size for index derivatives contract in a phased manner. The minimum of derivatives contract at the time of introduction is proposed to be between Rs 15 lakh to Rs 20 lakh. After six months, the minimum will be between Rs 20 lakh to Rs 30 lakh.

Currently, the minimum contract size requirement for derivative contracts is Rs 5 lakh to Rs 10 lakhs, last set in 2015.

SEBI has also proposed to rationalise weekly index products by allowing weekly options contracts on only a single benchmark index of an exchange.

"Expiry day trading is almost entirely speculative. Given there is an expiry of weekly contracts on all five trading days of the week combined with previous findings on increased volatility on expiry day and within that increased volatility during closing time, speculative activity created near contract expiry and poor profitability outcome for individual investors in F&O segment, rationalisation is warranted in the product offering," the consultation paper said.