June 11 (Punjab Khabarnama) : Market regulator Securities and Exchange Board of India (SEBI) on Monday proposed strict criteria for inclusion of individual stocks in the derivatives segment. According to the new proposal, stocks with consistently low trading volumes will be excluded from the futures and options (F&O) segment of the stock market. In a consultation paper issued by SEBI in this regard, the market regulator has said that without sufficient depth in the underlying cash market, the risk of market manipulation, increased volatility and compromise on investor protection may increase.
Keeping all this in mind, it is important for SEBI to ensure that only high quality stocks are available in the derivatives segment in terms of size, liquidity and market depth. Under the proposal, for an individual stock to be included in derivative trading, it should be traded in at least 75 percent of the total trading days. Apart from this, at least 15 percent of active traders or 200 members (whichever is less) should have traded in this stock and its average daily turnover should be between Rs 500 crore and Rs 1,500 crore.
Maximum number of contracts also proposed
SEBI has proposed that apart from this, the maximum number of open contracts for the underlying shares should be Rs 1,250 crore and Rs 1,750 crore. Currently this figure is Rs 500 crore. The purpose of these proposals is to ensure adequate trading in the concerned stock. SEBI has sought public comments on this proposal by June 19.
These stocks may be in trouble
If the proposal of the market regulator to review the selection criteria for entry and exit of shares in the derivatives market is implemented, then at least 78 stocks like LIC, Zomato, Yes Bank, Jio Financial, Paytm, RVNL and Adani Green can be included in the F&O list.
