Regulatory Authority SEBI Issues New Rules for Introduction of Commodity Options
DSIJ Intelligence / 14 Jun 2017
New rules for the introduction of commodity options have been issued by the Securities and Exchange Board of India (SEBI). It would allow only one commodity option per exchange on a pilot basis.
New rules for the introduction of commodity options have been issued by the Securities and Exchange Board of India (SEBI). It would allow only one commodity option per exchange on a pilot basis.
Proposals need to be submitted by the exchanges for the product they wish to launch. Non- agri commodities need to be based on a commodity which has an average daily turnover of at least Rs 1,000 crore. For agricultural commodity options, the bar is set lower at Rs 200 crore. Moreover, these commodities would have to be in the top five in these exchanges in daily turn over.
Earlier, rules allowed for settlement of options only through physical delivery or via cash. This practice was not in line with global practices and proved to be a logistic hurdle. After the change in rules, exchanges could introduce options which had futures contracts as underlying. Option contracts would be converted to futures on the day of expiry.
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