<img src="https://static.gujaratsamachar.com/content_image/content_image_c6d57eba-98fd-40c1-9a42-a6823b3f509d.jpeg" data-filename="SEBI tightens F&amp;O rules after 9 out of 10 investors suffer losses.png" style="width: 100%;"> In a bid to deter young retail investors from getting into high-risk futures and options (F&amp;O), the Securities and Exchanges Board of India (SEBI), has tightened its rules around the segment.According to a recent SEBI report, the aggregate losses of individual traders in the equity futures and options segment exceeded ₹1.8 lakh crore over the three-year period between FY22 and FY24. Over nine out of 10 individual traders in the equity futures and options segment continue to incur significant losses.A circular from SEBI, dated October 1, noted that with F&amp;O, ‘a derivative contract shall have a value not less than ₹15 lakh at the time of its introduction in the market’.Earlier, the contract values of ₹5 lakh to ₹10 lakh were allowed at the time of introduction, making it easier for small traders to jump in.“Further, the lot size shall be fixed in such a manner that the contract value of the derivative on the day of review is within ₹15 lakh to ₹20 lakhs,” stated the circular.&nbsp;“Given the inherent leverage and higher risk in derivatives, this recalibration in minimum contract size, in tune with the growth of the market, would ensure that an inbuilt suitability and appropriateness criteria for participants is maintained as intended,” said SEBI.The new rule will be effective for all new index derivatives contracts introduced after November 20, 2024.<h2 style="text-align: left;">Removal of calendar spread</h2>Moreover, the market regulator has also decided to remove the ‘calendar spread treatment’ on the expiry day with F&amp;O.According to the circular, “Expiry day can see significant basis risk, where the value of a contract expiring on the day can move very differently from the value of similar contracts expiring in future. Given the relatively very large volumes witnessed on the expiry day vis-à-vis future expiry days, and the enhanced basis risk that it represents, it has been decided that the benefit of offsetting positions across different expiries (‘calendar spread’) shall not be available on the day of expiry for contracts expiring on that day.”This would be applicable for calendar spread positions in the equity index derivatives and will be effective from February 01, 2025.<h2 style="text-align: left;">Weekly index derivatives</h2>To calm things down on the ‘expiry days’ of F&amp;O and manage the price swings in the index, SEBI will allow each stock exchange to offer only weekly options on one main index, instead of several. This move will help reduce excessive trading and keep the market stable, protecting regular investors in the process.(With inputs from syndicated feed)Also read:<a href="https://english.gujaratsamachar.com/news/business/no-interest-penalty-to-be-charged-for-participants-in-gst-amnesty-scheme" target="_blank">No interest, penalty to be charged for participants in GST Amnesty Scheme</a><a href="https://english.gujaratsamachar.com/news/business/epfo-relaxes-withdrawal-rules-expands-limit-to-inr-1-lakh" target="_blank">EPFO relaxes withdrawal rules, expands limit to ₹1 lakh</a>

In a bid to deter young retail investors from getting into high-risk futures and options (F&O), the Securities and Exchanges Board of India (SEBI), has tightened its rules.

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SEBI tightens F&O rules as 9 out of 10 investors suffer losses

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