Excessive speculation

Proposed measures will reduce retail participation in F&O

The Securities and Exchange Board of India (Sebi) has released a consultation paper that lists seven proposals for changes in the derivatives segment (futures and options, or F&O) of the stock exchanges. These include proposals to increase the minimum size of derivatives contracts substantially, reduce the strikes available on an option, initiate surveillance of intra-day position limits, collect margins upfront for premiums, charge a higher “Extreme Loss Margin” on expiry day, and remove calendar spread benefits on expiry days. The net effect would be to raise the capital and liquidity requirements needed to trade in the F&O