NSE, BSE to exclude F&O contracts on Tata Motors, others

PTI New Delhi | Updated on November 26, 2019 Published on November 26, 2019

BSE last week announced that Tata Motors will be dropped from the the exchange’s benchmark Sensex. File Photo   -  PTI

Leading stock exchanges NSE and BSE have decided to exclude as many as four securities including Tata Motors and NBCC (India) from future and options trading from January 31 next year. Other two stocks to be excluded are Dish TV India and Castrol India, the bourses said in separate circulars.

The move is expected to protect market participants from huge single-day swings. “The existing unexpired contracts of expiry months November 2019, December 2019 and January 2020 shall be available for trading till their respective expiry and new strikes shall also be introduced in the existing contract months,” the exchanges said.

Accordingly, no contracts shall be available for trading in these securities with effect from January 31, 2020, they added.

Meanwhile, the BSE last week announced that Tata Motors will be dropped from the the exchange’s benchmark Sensex from December 23.

In February, capital markets regulator SEBI had proposed a slew of measures including capping the maximum daily movement of up to 20 per cent for all stocks including the ones that are part of future and options (F&O) segment in order to check excessive price movements.

SEBI had said the examination of price movement of scrips, on which derivatives are available, during the last six months, revealed 40 scrips witnessed intra-day movement of over 20 per cent. Out of this, 29 stocks have seen intra-day movement between 20 per cent and 30 per cent.

Concerns have been raised that investors’ wealth is getting wiped out in a single day by recent falls in stocks on which derivative products are available, as no price bands are applicable on them, the regulator had said in a consultation paper.

Derivatives markets or F&O segment reflects expectation of spot prices in the future, and current price bands or circuit filters are generally not applied on them. At present, there are over 200 stocks in F&O segment.

Published on November 26, 2019
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