SEBI okays trading in stock futures contract

MUMBAI, NOV. 1. The board of Securities and Exchange Board of India (SEBI) today approved the introduction of individual stock future contract on 31 stocks on which options contracts have been permitted by the regulator.

Earlier, the SEBI board at its meeting on September 4 had granted in principle approval for the introduction of futures on 31 stocks.

In a press release issued here today, the SEBI stated that initially the individual stock future contract would be settled in cash. The individual stock futures contract would have the same multiplier as the lot size for the option contracts in the same underlying stock. The contract would have a maximum maturity of 12 months. However, initially, contracts for a maturity of three months would be introduced.

In the beginning, three contracts of the maturity one, two and three months would be introduced simultaneously that at any point in time at least three individual stock futures contract on a particular underlying would be available for trading.

The initial margin on the individual stock futures would be computed on the basis of portfolio-based margining approach which takes an integrated view of the risk involved in the portfolio of each client consisting of all futures and options contract.

The exchanges would also monitor the exposure limits and in the case of individual stock futures contracts the value of gross open position at any point in time in all the individual stock futures contract should not exceed 20 times the available liquid net worth of a member. The SEBI also stated that the stock exchanges have expressed their readiness for the introduction of individual stock futures contract at an early date.

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