In order to streamline the process, markets regulator Sebi on Thursday categorised modifications in futures contract specification pertaining to quality parameters for commodity derivatives.
The decision has been taken in consultation with the exchanges, Securities and Exchange Board of India (Sebi) said in a circular.
Sebi, in 2016, allowed commodity exchanges to modify futures contract specifications pertaining to quality parameters, a move aimed at ensuring that bourses are enabled to respond to market requirements quickly.
In the circular, Sebi said it has decided to categorise the modifications in contract specification parameters in three categories. The first one is non-material modifications which can be made at the exchange level in yet to be launched and running contracts.
In this category, the specification parameters related to ticker symbol, maximum order size, initial margin, extreme loss margin and 10 days advance notice needs to be given.
The second pertained to "material modifications which can be made at the exchange level in yet to be launched contracts or running contracts which have nil open interest". These modifications will require approval from product advisory committee and clearance of regulatory oversight committee to be obtained post facto.
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The third related modifications can be made only after Sebi's nod. These modifications will need deliberations and approval from product advisory committee and regulatory oversight committee before seeking permission from the markets watchdog.
The permission to modify is subject to the condition that bourses would inform the market participants and the regulator in 10 days advance for the first category and 30 days each for the remaining two before introduction of any modification in contract specifications along with reasons for the same.
However, Sebi said that this will not apply to certain modifications which are required to be effected immediately considering the exigencies of the situation as per surveillance measure.