Capital market regulator Sebi may revise the schedule for weekly contract expiry and introduce a fortnightly expiry in an attempt to cool down the index options segment, news publication Mint reported on July 8 citing people familiar with the matter.
Certain additional measures on position limits and changes in the calculation of open interest on index futures and options became effective this month, the report quoted a source as stating. Position limit refers to the exposure an investor can take in index options, while open interest refers to an outstanding buy or sell position in that contract.
Sebi will likely see if recent measures bring down options volumes over the next few weeks, and more measures like fortnightly expiry, or having only one benchmark index expiry per fortnight may be implemented later, if recent steps show no or very little change to volumes, the report added.
Moneycontrol couldn't independently verify the report.
Sebi has been attempting to curb the heightened interest by retail investors in the Futures & Options (F&O) segment for a long time. A recent study by the market regulator showed that individual investors in F&O have declined and losses have also widened. It said that 9 out of 10 individuals still are incurring losses in F&O trades.
The regulator has ordered a total of nine measures for the equity derivatives segment as part its F&O 2.O norms, following the first round of reforms issued on October 1, 2024 to curb market volatility on expiry days. The nine measures included position creation in single stocks during a ban period if it reduces the risk of a portfolio, hiking index options position limit to Rs 10,000 crore, and more.
The watchdog had barred US-headquartered proprietary trading firm Jane Street over manipulating Bank Nifty contracts using multiple strategies like taking bullish positions in cash and futures in indices or constituents in the morning to give a false sense to investors, and then taking huge bearish positions in the afternoon. Jane Street has disputed the findings of Sebi's interim order.
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