Derivatives Contract Size Set To Be Halved

The Securities and Exchange Board of India (Sebi) has taken an in-principle decision to reduce the contract size of derivatives.

Sebi's expert committee on derivatives which met here today discussed the issue of reducing the contract size in order to bring in more players into the market and make trading more accessible and deep.

It was also decided to include more scrips under individual stock options and futures. Sebi officials refused to comment on the decisions taken but sources said that the contract size, which is currently at Rs 2 lakh, is expected to be halved.

The specific stocks to be included will be notified soon in consultation with the stock exchanges, informed sources said.

At present there are 31 stocks which are being traded in the derivatives segment. The expectation is that it will be increased to fifty.

The exchanges, while selecting the scrips for derivatives trading, take into account the liquidity in the scrip, impact cost as well as trading volumes.

Sources familiar with developments said that they were taking things one step at a time in the derivatives market.

The expectations are that there will soon be a relaxation in the capital adequacy norms for members in the derivatives segment so that sub-brokers can also be appointed. And physical settlement in derivatives is also being looked forward to anxiously.