look news india
New Delhi: The proposed increase in index derivative contract size for the Securities and Exchange Board of India (Sebi) derivatives framework may increase the attractiveness of the already popular and high-risk options segment.
The regulator has proposed that the minimum value of a derivatives contract at the time of origination should be between Rs. 15 lakh and Rs. 20 lakh. This should be increased to between Rs. 20 lakh and Rs. 30 lakh after 6 months, Sebi has said in the consultation paper. Currently, the minimum value of a derivatives contract is around Rs. 5 lakh. The larger contract size is aimed at increasing entry barriers for small investors.
The entry barrier for the futures segment is already higher than that for options. Options can be traded for as little as Rs. 500. This has led to the popularity of the options segment growing rapidly.
Currently, index options account for 29 per cent of total futures and options trading. This share has increased significantly from 5 per cent in FY20. Meanwhile, the share of index futures is now just 15 per cent, down from 29 per cent in FY20.
SEBI's proposal comes a week after the government raised the securities transaction tax on sale of options from 0.0625 percent to 0.1 percent and on futures sale in securities from 0.0125 percent to 0.02 percent. Analysts say these changes will further increase the attractiveness of options trading.
In FY24, the cash market segment will reach Rs. 217 lakh crore turnover. The total derivative segment turnover on premium basis was Rs. 482 lakh crore, up 2.2 times.
