Financial Daily from THE HINDU group of publications
Tuesday, Jul 20, 2004

Cross Currency

Group Sites

Home Page - Regulatory Bodies & Rulings
Markets - Derivatives Markets

New eligibility norms for futures, option contracts

Our Bureau

Mumbai , July 19

THE Securities and Exchange Board of India (SEBI) has revised eligibility criteria for stocks and indices on which futures and options can be introduced.

According to the new rules, which will come into effect from September 1, stocks will be chosen from among the top-500 scrips in terms of average daily market capitalisation and average daily traded value for the previous six months on a rolling basis.

Also, the market wide position limit in the stock cannot be less than Rs 50 crore. "Since the market wide position limit for a stock is computed at the end of every month, the exchange shall ensure that stocks comply with this criterion before introduction of new contracts. Further, the market wide position limit (which is in number of shares) shall be valued taking the closing prices of stocks in the underlying cash market on the date of expiry of contract in the month," states the SEBI circular.

Derivative contracts on an index can now be introduced by stock exchanges if 80 per cent of the index constituents are individually eligible for derivatives trading. However, no single ineligible stock in the index can have a weightage of more than 5 per cent in the index. The index on which futures and options contracts are permitted will be required to comply with the eligibility criteria on a continuous basis, according to the market regulator.

The circular issued to stock exchanges clarifies that if the mark to market margin/settlements (MTM) for derivative contracts is not collected before the start of the next day's trading, the exchange is required to collect correspondingly higher initial margins to cover the potential for losses over the time elapsed in the collection of MTM.

More Stories on : Regulatory Bodies & Rulings | Derivatives Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Sops for farmers, ST reliefs in Karnataka Budget

Lodha files for probate; Birlas to contest
Air Sahara unveils `SurPrice' fares — Offers 69 pc discount on major routes
Chidambaram assures relook at transaction tax
Left opposes Govt move to hike FDI
TCS pegs IPO in Rs 775-900 band
New eligibility norms for futures, option contracts
Reliance, Essar: Changing the rules of fuel retailing

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line