Review of minimum contract size in equity derivatives segment
Summary
This circular increases the minimum contract size in the equity derivatives segment from Rs. 2 lakhs to Rs. 5 lakhs effective after October 2015. It modifies the lot size determination framework, specifying multiples and minimums for stock and index derivatives to keep contract values between Rs. 5 and 10 lakhs. Stock exchanges are mandated to ensure uniform lot sizes across platforms and review them every six months.
Text
The requirement was recently reviewed and it has been decided to increase the minimum contract size in equity derivatives segment to Rs. 5 lakhs.
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 lakhs and Rs. 10 lakhs.
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... is greater than Rs. 10 lakhs, 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 shall jointly ensure that the lot size is same for an underlying traded across exchanges.
The stock exchanges shall 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.
In case of corporate action, the revision in lot size of existing contracts shall be carried out as per SEBI circular SMDRP/DC/CIR-15/02 dated December 18, 2002.
The aforesaid provisions shall be made effective from the next trading day after expiry of October 2015 contracts.
This Circular supersedes SEBI circular SEBI/DNPD/Cir-50/2010 dated January 08, 2010.
take necessary steps to put in place systems for implementation of this circular, including necessary amendments to the relevant bye-laws, rules and regulations.
bring the provisions of this circular to the notice of the stock brokers and also disseminate the same on their website;
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Source: SecMarx — Review of minimum contract size in equity derivatives segment. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.