Minimum contract size in equity derivatives segment hiked to Rs 5 lakh from Rs 2 lakh

Changes to be effective from next trading day after expiry of October 2015 derivatives contracts

Stock market regulator Securities and Exchange Board of India (Sebi) has hiked the minimum contract size in equity derivatives segment to Rs 5 lakh from Rs 2 lakh. The change will be effective from the next trading day after expiry of October 2015 derivatives contracts, Sebi said in a circular issued to the stock exchanges on 13 July 2015. The lot size for derivatives contracts in equity derivatives segment shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs 5 lakh and Rs 10 lakh, according to the Sebi circular.

For stock derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 25, provided the lot size is not less than 50. However, if the contract value of the stock derivatives at the minimum lot size of 50 is greater than Rs 10 lakh, then lot size shall be fixed as a multiple of 5, provided the lot size is not less than 10. For index derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 5, provided the lot size is not less than 10.

The stock exchanges will be required to review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month and wherever warranted, revise the lot size by giving an advance notice of at least 2 weeks to the market. If the revised lot size is higher than the existing one, it will be effective for only new contracts.

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