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In a view to reduce complexities and strengthen risk management in equity derivatives, SEBI has decided to transition from Open Interest (OI) to a delta-based approach. Accurate computation of open interest will likely reduce the chances of a stock entering the F&O ban period. It also helps in setting a proper risk-management measure and simplifies the trading experience for small investors.
To improve price discovery and to reduce volatility at the time of market opening, pre-open and post-closing sessions are proposed to allow futures in line with the cash market. To reduce the concentration risk in derivatives on non-benchmark indices, the index should have at least 14 constituents or stocks and the weightage of the top stock should not be greater than 20%. This will help in reducing the chances of market manipulation and reduce excessive volatility as well. Overall, SEBI is taking active steps to protect retail investors by keeping a check on risk exposure and improving the trading framework in equity derivatives.