Comment on SEBI circular Final Settlement Day (Expiry Day) for Equity Derivatives Contracts by Ajay Garg, CEO, SMC Global Securities
Below the Comment on SEBI circular Final Settlement Day (Expiry Day) for Equity Derivatives Contracts by Ajay Garg, CEO, SMC Global Securities
As per SEBI's latest circular, stock exchanges will have to pick only one weekly benchmark index options contracts, which can be either Tuesday or Thursday. This will help in reducing the concentration risk and help stock exchanges to go with product differentiation. This step will also help in curbing the excessive expiry-day volatility, create uniformity, and promote market stability.
For all other equity derivatives contracts, the expiry should be chosen from the last Tuesday or last Thursday of the month. The decision to limit expiry to specific days will help in reducing the clutter between multiple exchanges, boost product innovation, and create a robust risk management framework for the investors. Exchanges will now have to take approval from SEBI before making any changes to expiry days. It will help in creating predictability in the market and reduce constant re-shuffling of expiry days, thereby giving a clear picture to the investors.
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