SEBI Considering Increase in Future Options Contract Limit to 20 Lakh for Investor Benefits

Efforts by Exchange and SEBI to Curb Speculation in the Stock Market

The equity market has seen aggressive bullish trends recently. To curb speculation in the stock market, especially in futures and options where over 90% of traders incur losses, exchanges and SEBI have taken stringent measures. SEBI is considering increasing the futures options contract from 5 lakh to 20 lakh.

One of the main reasons for the bullish trend in the stock market is the increased investment by small investors in India. Mutual fund SIP investments are consistently rising every month. Over two lakh new demat accounts are opened daily. On the other hand, it is true that many traders in futures and options are experiencing losses. SEBI has discussed this issue and recently announced guidelines that suggest increasing the current 5 lakh contract in futures to 20 to 30 lakh. This would require higher margins, potentially keeping small investors and traders away from these investments, thereby reducing their losses.

Stock market expert Pareshbhai Vaghamani stated that SEBI and exchanges are taking several measures to curb speculation. There are also discussions about imposing limits on the strike prices of futures options in the future.

Reduction in Number of Shares Used for Margin

Reducing the number of shares used for margin will result in a decrease in the volume of futures options. This will increase the proportion of genuine transactions in the market and reduce speculation. The stock market is providing very good returns to those investing in cash stocks in the secondary market. For those starting to invest in the stock market, it is advisable to begin with the primary market where the risk is much lower. The number of retail investors in the country is continuously increasing.

According to data from the Central Depository Service and the National Securities Depository, the number of demat accounts opened in June exceeded 4.24 million, the highest rate since February 2024. Compared to May, the number of new demat accounts in June increased by 4.24% and by 34.66% compared to June 2023. In May 2024, 3.6 million new demat accounts were opened in the country, compared to 2.36 million in June the previous year.

SME-IPO Listings Cannot Exceed 90% Premium

In the primary market, the listing of SME IPOs on the Bombay Stock Exchange has an upper limit of 90% premium. Similarly, on the National Stock Exchange, no SME IPO listing will exceed 90% premium. Listings will be at a maximum of 90% premium, with a 5% circuit filter applied daily in the subsequent days.