Adjustment in derivative contracts for dividend announcements
Summary
SEBI has revised the framework for adjusting derivative contracts following dividend announcements by setting a new threshold. Adjustments are now mandatory only when declared dividends equal or exceed 2% of the underlying stock's market value. This circular modifies previous regulations and directs stock exchanges to implement necessary systemic changes.
Text
adjustment in derivative contracts shall be carried out in cases where dividends declared are at or above 2% of the market value of underlying stock.
The revised threshold, as stated above, would be applicable for dividend announcements done on or after the effective date of the circular.
SEBI circulars dated June 21, 2001, December 18, 2002 and July 05, 2018 shall, accordingly, be modified to the above extent. All other provisions of the said SEBI circulars shall continue to remain applicable.
The provisions of this circular shall come into effect from June 29, 2022.
Stock Exchanges and Clearing Corporations are directed to: a) take necessary steps to put in place systems for implementation of the circular... b) bring the provisions of this circular to the notice of their members... c) confirm to SEBI, that the of the provisions of this circular have been implemented.
This circular is being issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956...
Source: SecMarx — Adjustment in derivative contracts for dividend announcements. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.