SEBI says minimum contract size for index derivatives will be increased

The Securities and Exchange Board of India (SEBI) has announced a set of regulations for equity index derivatives. Measures include increasing the minimum contract size, upfront collection of option premiums, and intra-day monitoring. In a critical decision, the minimum contract size for index derivatives will be increased to ensure suitability for market participants, with new contracts introduced after November 20, 2024, needing a value of at least Rs 15 lakhs. SEBI is also rationalising the weekly index derivatives products offered by exchanges, allowing only one benchmark index with a weekly expiry per exchange, in order to reduce excessive trading. It also introduced intra-day monitoring of position limits, eliminated calendar spread benefits on expiry days, rationalized weekly index derivatives, and increased tail risk coverage. The new laws will go into effect on February 1, 2025.