MUMBAI, October 10 — The Securities and Exchange Board of India (SEBI) on Saturday notified a stringent six-point regulatory framework governing the equity index derivatives (Futures and Options - F&O) segment, aiming to curb hyper-speculative retail volumes and fortify systemic market risk management across domestic bourses.
Under the circular directives taking effect in phases from November 2026, the minimum derivative contract lot value at introduction has been recalibrated upward from the existing ₹5-10 lakh band to ₹15-20 lakh. Furthermore, stock exchanges (NSE and BSE) have been restricted to offering weekly index options contracts on only a single benchmark index per exchange, curbing expiry-day hyper-volatility across multiple weekly products.
Additional tightening stipulations mandate upfront collection of option premiums from buyers by trading members, removal of calendar spread margin benefits on expiry days, intraday monitoring of position limits, and an additional 2 percent Extreme Loss Margin (ELM) on short options contracts on the day of expiry. The regulatory action follows SEBI’s empirical study revealing that 93 percent of over 1 crore individual F&O traders incurred cumulative net losses exceeding ₹1.8 lakh crore over a three-year period.
The statutory mandate of SEBI under the SEBI Act 1992 (protecting investor interests and regulating securities markets), capital market instruments (Spot vs Forward vs Futures vs Options), margin requirements (SPAN and Extreme Loss Margin), and macroprudential oversight under the Financial Stability and Development Council (FSDC) are foundational topics across UPSC Civil Services (GS-III: Financial Markets), SEBI Grade A, and RBI Grade B examinations.