SEBI F&O Rules Impact: BSE To Discontinue Weekly Index Derivatives Contracts Of Bankex, Sensex 50

The weekly index derivatives contracts on Sensex 50 and Bankex are to be discontinued with effect from Nov. 14 and Nov. 18, respectively. This follows the new framework launched by the Securities and Exchange Board of India on Tuesday.

This indicates that BSE will have only one tradeable index, which is Sensex.

SEBI, in the circular issued on Tuesday, outlined new regulations for the futures and options trading segment. According to the circular, SEBI has asked exchanges to limit weekly option expiries to one per exchange from Nov. 20.

Exchanges will also be mandated to monitor intraday positions at least four times a day, imposing penalties for any breaches of intraday limits, similar to the penalties applied at the end of the trading day.

The recent measures will also require buyers to pay premiums upfront.

Additionally, the minimum contract value for index derivatives will be raised to Rs 15 lakhs, a move designed to enhance trading standards and efficiency.

The circular also eliminates calendar spread benefits on expiry day for expiring contracts, marking a significant change in the trading landscape.

These changes followed a rise in retail investors trading options, which according to the regulator and the government was a risk to household finances.

A study by SEBI released last month indicated that nine out of 10 individual traders experienced losses in the futures and options trading over the three years ending March 2024. The total losses, according to the study, amount to over Rs 1.8 lakh crore.

The study revealed that individual traders faced average losses of approximately Rs 2 lakh each, factoring in transaction costs. The top 3.5% of loss-makers, comprising about 400,000 traders, experienced average losses of Rs 28 lakh each.

The study also revealed that the percentage of traders under the age of 30 in the F&O segment rose from 31% in the financial year ending March 2023 to 43% in the previous financial year.