In a bid to improve market integrity and check manipulation,the Securities and Exchange Board of India (Sebi) has hiked the benchmark liquidity level for any scrip to be eligible for trading in the derivatives segments.
Now scrips with a minimum trading volume of Rs 10 lakh and market wide position limit (MWPL) or market capitalisation of Rs 300 crore would be eligible for entry into the future and options (F&O) segment,Sebi said in a circular. In order to improve market integrity,it has been decided,in consultation with stock exchanges,to tighten the eligibility and exit criteria for stocks in derivatives segment, Sebi said.
The move is likely to help curb any manipulation in share prices and bring in more meaningfulness to the F&O segment. Besides,it will enhance liquidity in the derivative segment,they added. At present,over 220 scrips trade in the F&O segment of the National Stock Exchange. Of these,only around 100 scrips are likely to meet the new eligibility criteria set by Sebi,experts said.
Through this move Sebi wants to ensure that only relevant stocks with good amount of liquidity is able to trade in the F&O segment and help curb manipulation, SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla said.
Sebi had recently said that investors suspected to be involved in manipulating share prices will have to give an undertaking to market authorities that they are not linked to the promoters of listed companies they buy into. Sebi had asked stock exchanges to initiate a process of obtaining an undertaking from brokers as well as clients in cases where trading behaviour of an investor or group is irregular or suspicious.
On Monday,Sebi said the minimum Median Quarter Sigma Order Size (MQSOS),which indicate liquidity or order size in a scrip,requirement for introduction in derivatives segment has been revised to Rs 10 lakh,from Rs 5 lakh at present. Also the MWPL,indicating the size of the company,has been raised to Rs 300 crore,from Rs 100 crore. It further said scrips which fail to maintain a minimum MWPL requirement of Rs 200 crore would cease to be in the F&O segment. Earlier this limit was Rs 60 crore.
The scrip would exit the derivative segment if MQSOS falls below Rs 5 lakh. Earlier this limit was Rs 2 lakh,Sebi said.
Further,to assess the trading depth of a scrip in the derivatives segment,Sebi said the trading stock derivatives should have an average monthly turnover of Rs 100 crore in the last three months.
No fresh month contract shall be issued on stocks that may exit the F&O segment, Sebi said while allowing the existing unexpired contracts to trade till expiry.
No fresh month contract should be issued on stocks that may exit the F&O segment. However,the existing unexpired contracts may be permitted to trade till expiry and new strikes may also be introduced in existing contract months,Sebi said.
* Scrips which fail to maintain a minimum MWPL requirement of Rs 200 crore would cease to be in the F&O segment. Earlier this limit was Rs 60 crore
* The scrip would exit the derivative segment if MQSOS falls below Rs 5 lakh. Earlier this limit was Rs 2 lakh