SEBI New Index Derivatives Framework: Lot Sizes, Expiries and Retail Margin Impact
To curb excessive retail speculation in index futures and options (F&O), SEBI introduced a phased six-measure framework designed to elevate systemic resilience and align contract sizes with investor risk profiles.
1. Contract Size Elevation to Rs 15 Lakh - Rs 20 Lakh
The minimum contract value for index derivatives was raised from the historical Rs 5 Lakh band to between Rs 15 Lakh and Rs 20 Lakh. For Nifty and Bank Nifty contracts, exchange lot sizes have been recalibrated to ensure minimum entry margin thresholds reflect higher capital requirements.
2. Rationalization of Weekly Expiries
Each stock exchange (NSE and BSE) is now permitted to offer weekly derivative contracts for only one benchmark index. For example, NSE retained Nifty 50 weekly options while discontinuing Bank Nifty / FinNifty weekly contracts, dramatically reducing intra-week volatility clustering.
3. Upfront Collection of Option Buying Premiums
Brokers must collect 100% of client option premiums upfront on trade date (T+0). Intraday leverage or collateral adjustments against unpaid option purchases are prohibited, preventing negative equity spikes.
4. Removal of Calendar Spread Treatment on Expiry Day
Margin benefits previously afforded to calendar spread positions expiring on that trade day are discontinued, requiring independent margin coverage for legs with same-day settlement risk.
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