SEBI has issued proposals today to safeguard the interests of investors amid the increasing volatility due to the increasing participation of retail investors in the derivatives market. This includes proposals ranging from increasing the contract size to increasing the margin near expiry. SEBI said in its consultation paper that as the expiry approaches, trading activity, open positions and volatility increase. However, this is not seen in the form of an increase in margin which can provide protection against risk. Due to the increase in risk, there is also a possibility that it may have an impact on the stock market.

SEBI said that to deal with such risks, it is proposed to increase the margin for the expiry day and the day before it. According to the proposal, the extreme loss margin will be increased by 3 percent on the day before the expiry day, while the extreme loss margin on the expiry day will be further increased by 5 percent. Apart from this, SEBI has also made proposals on rationalizing the option strike, upfront collection of option premium from option buyers, intraday monitoring of position limits, increasing the minimum contract size.

SEBI tightens derivatives framework
Upfront option premium will be taken from index option buyers. The new F&O rules will be implemented in phases from November 20. An additional margin of 2% will be taken for short option contracts on the day of option expiry. The contract size for index derivatives has been increased. The value of the derivatives contract will not be less than Rs 15 lakh. There will be only one weekly expiry of an exchange every week. Intraday monitoring of position limits will be done from April 1, 2025. Upfront collection of option premium and increased margin will be applicable from February 2025 Why new rules have come- Derivative market is a very risky market. SEBI is currently worried about the fact that the share of retail investors is increasing in it. SEBI believes that investors are coming into it because they expect very high profits from here. But most of such investors do not understand the derivative market. The purpose behind increasing the limits by SEBI is that only such investors should enter the derivative market who think seriously about the market.