SEBI has revised the eligibility criteria for entry and exit of stocks in the derivatives segment.

A stock’s median quarter sigma order size and its market wide position limit over the previous six months, on a rolling basis, should not been less than ₹75 lakh and ₹1,500 crore, respectively. The requirements for both these criteria has been raised 3x. A stock’s average daily delivery value in the cash market, in the previous six months on a rolling basis, should not be less than ₹35 crore.

Stocks which meet the eligibility criteria in the underlying cash market of any stock exchange would be permitted to trade in equity derivatives segment of all stock exchanges.

In addition, aspects such as surveillance, investigation, or administrative concerns will be taken into account while considering a stock for introduction into derivatives segment.

If a stock fails to meet these criteria for three months it will exit the derivatives segment. No new contract will be issued on these stocks. However, the existing unexpired contracts may be permitted to trade till expiry. Once a stock is excluded from the derivatives segment, it will not be considered for re-inclusion for one year.

The regulator has introduced a product success framework (PSF) for single stock derivatives.

At least 15 per cent of trading members active in all stock derivatives or 200 trading members, whichever is lower, should have traded in any derivative contract on an average on monthly basis on the stock being reviewed. Trading should be on a minimum of 75% of the trading days, with average daily turnover of at least ₹75 crore. Average daily notional open interest of at least ₹500 crore is needed during the review period.

A stock is excluded due to PSF will not be considered for re-inclusion for one year.

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