The National Stock Exchange of India Ltd may introduce new securities in the derivatives market in February 2020 as the market regulator’s six-month ban on the NSE expired on 31 October 2019.
About 10-14 securities could be included if they meet the eligibility criteria for trading in the futures and options market, according to reports by Edelweiss Research and ICICIDirect Research.
NSE has not introduced any new scrip in F&O in the last couple of years. It had announced on April 30, 2019, three stocks for inclusion in F&O viz. PNB Housing Finance, MphasiS and Larsen & Toubro Infotech.
However, it withdrew the circular on May 29, 2019. Thus, expecting a timeline for the new inclusion may not be feasible.
“We believe the upcoming Nifty rebalancing may be a trigger for the inclusion of a few stocks in the F&O segment. Stocks that are not in F&O may not be part of Nifty. The next Nifty rebalancing will be announced in February 2020. We can expect an announcement of stock’s inclusion in F&O in the current calendar year,” ICICIDirect Research said in a note.
From a data perspective, the brokerage firm believes that stocks that are likely to qualify for F&O inclusion include names like SBI Life Insurance, HDFC Life Insurance, ICICI Lombard, Bandhan Bank, Avenue Supermarts, HDFC AMC, Godrej Properties, Info Edge, Oberoi Realty, and Reliance Nippon.
Edelweiss Research has put out 14 companies which could be part of the derivative segment. These include Bandhan Bank, Avenue Supermarts, Edelweiss, Godrej Properties, HDFC AMC, HDFC Life Insurance, Indiabulls Ventures, ICICI Lombard, Jubilant FoodWorks, Info Edge, Oberoi Realty, PNB Housing, Reliance Nippon, and SBI Life Insurance.
Futures & options contracts may be introduced on new securities, which meet the below-mentioned eligibility criteria, subject to approval by SEBI.
1) The stock shall be chosen from among the top 500 stocks in terms of average daily market capitalisation and average daily traded value in the previous six months on a rolling basis.
2) The stock's median quarter-sigma order size over the last six months shall not be less than Rs 25 lakh. For this purpose, a stock's quarter-sigma order size shall mean the order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation.
3) The market-wide position limit in the stock shall not be less than Rs 500 crore on a rolling basis. The market-wide position limit of open positions (in terms of the number of the underlying stock) on futures and options contracts on a particular underlying stock shall be 20 percent of the number of shares held by non-promoters in the relevant underlying security i.e. free-float holding
4) The average daily delivery value in the cash market shall not be less than Rs 10 crore in the previous six months on a rolling basis. The average daily deliverable value shall be computed taking deliverable quantity as per client level as computed by NSE Clearing Ltd on a daily basis and close price of the trade date.
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