Today, May 7, 2025, the SEBI’s Secondary Market Advisory Committee convenes to discuss significant improvements in the stock derivatives sector. The next phase of the “F&O 2.0” regulatory attempt is represented by this meeting. With its emphasis on issues including investor protection, market manipulation, and speculative trading, the agenda is anticipated to significantly change India’s stock derivatives market.
Exciting Changes Ahead in Open Interest and Expiry Days!
SEBI is considering switching to a more creative “Future Equivalent” or delta-based method of calculating Open Interest (OI) instead of the conventional notional value-based method. The goal of this innovative method is to help prevent any possible manipulation that can unjustly interfere with trade while offering a clearer picture of market risk.
To increase market stability, SEBI is also thinking of moving the expiration date of contracts for equity derivatives to Tuesday or Thursday. The goal of this change is to avoid expiry clustering, particularly at the start or end of the week. The goal is to lessen volatility and give everyone involved a more even allocation of risk.
In a nutshell the committee is keeping a careful eye on the effects of new regulations that have been in place since October 2023. These regulations include collecting option premiums in advance and restricting weekly option expirations to one per exchange. Based on initial findings, these measures have improved market stability, and we don’t think any more restrictions will be needed for the time being!
The new legal frameworks and novel trading methods that are anticipated to be put into place after today’s meeting will have an impact on a wide variety of stakeholders, including retail traders, institutional investors, and regulatory agencies. Enhancing the effectiveness and transparency of commerce is the main objective of these decisions.
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