SEBI Board Meeting: Tighter F&O Norms, New Asset Class, And Employees' Issues On Agenda

The Securities and Exchange Board of India is scheduled to hold its board meeting this coming Monday, during which, among other things, it is expected to approve tighter trading regulations for derivatives, as per the sources aware of the matter.

Additionally, SEBI plans to raise margins closer to contract expiry, increasing the extreme loss margin (ELM) by 3% the day before and 5% on expiry day. It also suggests removing the calendar spread benefit on expiry day and increasing margins for near-term expiries while establishing guidelines for options strikes.

Additionally, the board is likely to discuss the introduction of a new asset class designed to bridge the gap between mutual funds and portfolio management services (PMS) targeted at high-net-worth individuals (HNIs), according to the sources. This initiative is expected to offer investors more diverse options in managing their investments.

Furthermore, the board is set to address recent employee-related issues and the measures implemented to resolve them, ensuring the integrity and efficiency of the organisation.

In July, the regulator proposed gradually increasing the minimum contract size for derivatives from Rs 15 lakh to Rs 20 lakh, then from Rs 20 lakh to Rs 30 lakh after six months. The current minimum of Rs 5 lakh to Rs 10 lakh was set in 2015.

SEBI also aims to limit weekly options contracts to one benchmark index per exchange, reducing daily expirations to two per week. It recommends collecting option premiums upfront and monitoring position limits for index derivatives intra-day.

The regulator has also come out with a recent study mentioning that 9 out of 10 individual traders in the F&O segment face losses and a major chunk of them belongs to the age group below 30 years. This study is in progression of an earlier one released by SEBI in Jan this year.