Stocks

Nifty IT index out of F&O

Chennai | Updated on April 13, 2020

The National Stock Exchange has decided to discontinue trading on Nifty IT index from derivative segment.

According to SEBI framework for continued eligibility of Index derivatives, the available index derivatives are reviewed semi-annually at the underlying level as per the prescribed criteria. If any index derivatives fail to satisfy any of the prescribed criteria, then no fresh contracts should be issued on that index, the NSE said in a release.

Currently, Nifty IT index is available for trading both on weekly as well as monthly contract basis. Accordingly, the weekly contracts will expire on June 4 and the monthly contracts on June 25.

Exchanges can continue trading on index derivatives only if 15 per cent of trading members remain active in all index derivatives or should have a minimum of 20 trading members, whichever is lower; the index contract should have witnessed trading on 75 per cent of the trading days; average daily turnover of at least ₹10 crore; and average daily open interest of ₹4 crore.

The Futures & Options (F&O) contracts on an index can be introduced only if the stocks contributing to 80 per cent weightage of the index are individually eligible for derivative trading. However, no single ineligible stocks in the index should have a weightage of more than 5 per cent in the index. The above criteria is applied every month, if the index fails to meet the eligibility criteria for three months consecutively, then no fresh month contract should be issued on that index. However, the existing unexpired contacts shall be permitted to trade till expiry and new strikes may also be introduced in the existing contracts.

Published on April 13, 2020

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