Introduction of Index options with longer tenure
Summary
This circular introduces long-term index options on Sensex and Nifty with tenures up to three years. It specifies the contract cycle structure, including serial, quarterly, and semi-annual months to ensure availability of at least three-year tenure contracts. Existing risk containment measures for equity index options are extended to these new long-term contracts.
Text
The SEBI Derivatives Market Review Committee (DMRC) headed by Professor M. Rammohan Rao, recommended the introduction of new derivative products in the Indian market, with option contracts on indices and stocks with life/tenure of up to 5 years (60 months) being one of them.
To begin with, it has been decided to launch long term options on Sensex and Nifty with tenures of upto 3 years.
The 3 serial month contracts would continue to exist.
The following 3 quarterly months of the cycle Mar/Jun/Sep/Dec would be available.
After these, 5 following semi-annual months of the cycle Jun/Dec would be available, so that at any point in time there would be options contract with atleast 3 year tenure available for investors.
The risk containment and other measures applicable for existing exchange traded equity Index option contracts shall be extended suitably to long term option contracts on Index.
This circular is being issued in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to promote the development of the securities market.
This circular is available on SEBI website at www.sebi.gov.in, under the category “Derivatives – Circulars”. The Circular shall come into force from the date of the circular.
Source: SecMarx — Introduction of Index options with longer tenure. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.