SEBI Secondary Market Panel May Discuss F&O Norms Impact On May 7 Meet—Profit Exclusive

The Secondary Market Advisory Committee of market regulator Securities and Exchange Board of India is set to meet on May 7, as per people in the know.

While the detailed agenda is not out yet, the committee members are likely to assess the impact of implemented F&O curbs and see if they have achieved the desired purpose, the sources said.

Two people quoted above further mentioned that some desired impact of the regulations has been seen already and any further curb on F&O or overregulation is unlikely.

On Feb 25, the regulator proposed a shift to a ‘Future Equivalent’ method of calculating open interest (IO) in the equity derivatives market. This was being suggested in place of a notional value-based method of calculation of IO, to prevent the stocks from being manipulated and pushed into a ban period.

The market regulator also suggested changes regarding the market-wide position limits or MWPL, which decide how much trading can take place in a stock.

Prior to this, in October last year, the regulator came out with a slew of provisions to deal with F&O trading volumes. These provisions included weekly options expiries being limited to one per exchange, upfront collection of premium from options buyers, intraday market monitoring and change in contract sizes and safer trading on expiry day.

It is important to note that the SEBI panel's points of discussions also included introducing a suitability criterion for the retail investors while entering the F&O segment, as reported by NDTV Profit previously. However, considering the impact of implemented curbs, the sources mentioned that this is unlikely to be taken up.

In fact, while addressing media queries on the SEBI board meeting on March 31, Chairperson Tuhin Kanta Pandey mentioned that the regulator cannot be restricting the entry of retail investors as it would be a sledgehammer approach.