2025-02-27 01:52:40 pm | Source: SMC Global Securities
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.
Comment on SEBI Consultation Paper on Enhancing Trading Convenience and Strengthening Risk by Ajay Garg, CEO, SMC Global Securities
Below the Comment on SEBI Consultation Paper on Enhancing Trading Convenience and Strengthening Risk by Ajay Garg, CEO, SMC Global Securities
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.
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