Sebi allows options trading in commodity futures

Sebi allowed choices buying and selling in commodities for deepening the market however approved each alternate to launch these contracts for just one product at the start, while asking bourses to apply tough chance administration measures.

putting in strict eligibility standards, Sebi stated choices can be launched on futures contract of simplest these commodities which are among the prime 5 in the case of complete buying and selling turnover worth of previous twelve months.

besides, the average daily turnover of underlying futures contracts of this type of commodity in previous 365 days must be at the least Rs 200 crore for agricultural and agri-processed commodities, and Rs 1,000 crore for different commodities.

"The Commodity derivatives exchanges willing to start trading in options contracts shall take prior approval of Sebi for launching such contracts," the markets regulator mentioned in a round.

Exchanges had been disturbing for long that options trading in commodities be allowed. while Sebi had agreed to permit options buying and selling final year itself, some criminal requirements have been retaining back the transfer.

After worrying discussions, Sebi finally made up our minds to permit choices trading on futures contract of commodities slightly than any commodity directly being allowed as an underlying security. so far, simplest futures trading was authorised on commodity bourses.

Sebi has also stipulated vital guidelines with regard to the product design and possibility management framework to be adopted for buying and selling in choices on commodity futures.

further, it has issued pointers on contract method, position limits and trading hours for choices on commodity futures.

in addition to, Securities and trade Board of India (Sebi) has allowed bourses to introduce European-style choices, whereby positions will also be settled handiest on the day of expiry.

"Exchanges shall undertake initial margin models and parameters which might be chance-based totally and generate margin requirements enough to quilt potential future exposure to contributors/purchasers in the interval between the last margin assortment and the shut out of positions following a participant/shopper default," the regulator stated.

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