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SEBI has introduced a new framework aimed at reducing excessive speculation in the stock market.

Banking & Finance | Dated: 08 Oct 2024

On October 1, 2024, the Securities and Exchange Board of India (SEBI) announced six measures aimed at the index derivatives trading framework to mitigate excessive speculation, addressing growing concerns over the rising losses faced by individual traders. Here are 6 rules proposed by Sebi to regulate F&O trading in India:- 1) Upfront collection of Option Premium from options buyers, 2) Removal of calendar spread treatment on expiry day, 3) Intraday monitoring of position limits, 4) Contract size for index derivatives, 5) Limiting weekly index expiry to one per exchange, 6) Increase in tail risk coverage on the day of options expiry.

🎯 Key Highlights:

  • - These measures will be rolled out in phases, starting from November 20, 2024.
  • - Under the new framework, SEBI has mandated that options premiums be collected upfront from option buyers by Trading Members (TMs) or Clearing Members (CMs), with implementation set for February 1, 2025.

💡 Other Important Facts:

  • (i) Here are 6 rules proposed by Sebi to regulate F&O trading in India:- 1) Upfront collection of Option Premium from options buyers, 2) Removal of calendar spread treatment on expiry day, 3) Intraday monitoring of position limits, 4) Contract size for index derivatives, 5) Limiting weekly index expiry to one per exchange, 6) Increase in tail risk coverage on the day of options expiry.

📚 Test Your Knowledge:

Which regulatory body introduced Rcently a new framework to reduce excessive speculation in the stock market?

Correct Answer: SEBI

🚀 Quick Recap:

About SEBI,

  • Chairperson: Madhabi Puri Buch
  • Headquarter : Mumbai