SEBI takes steps to tighten F&O trading, new rules to come into effect from November 20

New Delhi| In view of the losses suffered by retail investors in the stock market, the Securities and Exchange Board of India (SEBI) announced six new measures to strengthen the derivatives framework. The biggest change among these is increasing the minimum contract price.

SEBI said that now the value of the derivative contract should be at least Rs 15 lakh. Earlier this limit was between Rs 5 lakh and Rs 10 lakh, which was fixed in 2015. Since then the market price and prices have increased almost three times. The market regulator has decided that derivatives will now expire only once a week on every stock exchange.

SEBI said that on the expiry day when premiums (values) are low, trading is mainly for betting (buy-buy). Currently various stock exchanges offer contracts for every day, which expire every day of the week. Due to which the chances of betting increase.

SEBI has directed stock exchanges to monitor the ‘in trade position limit’ (trading conditions during the day). Since February 2025, it has been made mandatory for investors buying options to deposit the premium in advance. This means that when you buy the option, you will have to pay the fee in advance. Additionally, an additional margin of two per cent will have to be given for short options on the day of expiry of option contracts.

Market regulators have asked stock exchanges and clearing corporations (which deal with business) to take necessary steps to implement the new rules. Derivatives are helpful to market investors in finding the right price, increasing liquidity in the market and managing risk. But there are risks involved too. Which means that there is a possibility of loss if you invest in it. These measures will come into effect in a phased manner from 20 November.