Cash settlement in BSE stock F&O contracts from April 26

Premier bourse BSE today said it has decided to change the settlement mechanism from delivery-based settlement mode to cash-settlement in stock futures & options (F&O) contracts in its equity derivatives segment.

The BSE said effective April 26, trading on all existing single stock futures & options contracts, including all monthly and weekly expiry contracts expiring on or after April 26 will be settled in cash (settlement by payment of difference).

All single stock futures & options contracts like monthly and weekly expiry contacts expiring till April 25 will continue to have delivery based settlement, it added.

There will be no change in other contract specifications like contract size, strike intervals, number of strikes for options, expiry day and calculation of settlement price, it said.

Under single stock futures contracts, all open positions at expiry of the contract will result in settlement by payment of difference (cash settlement), while, under single stock options contracts, exercise of all in the money open positions will be automatic exercise on expiry day.

The existing options exercise window on BOLT (BSE online trading) WS will be discontinued from April 26 onwards, the release said.

The risk management framework, settlement process of single stock futures & options contracts will be made available via separate circular, the BSE said.