25% scrips have gone out of the segment since January.
The National Stock Exchange (NSE) has dropped 50 scrips from its futures and options (F&O) segment as they could not fulfil the new criterion prescribed by the Securities and Exchange Board of India (Sebi).
Yesterday, Sebi had issued fresh F&O guidelines to exchanges and imposed strict norms with immediate effect. These new guidelines came following the sharp rise and fall in the Akruti City stock in which traders had allegedly rigged the price because of a low float.
Most of these 50 stocks that have been dropped by the NSE had turned illiquid, increasing the possibility of price manipulation. No new contracts of these stocks can be traded from next month after the expiry on April 29. However, the existing contracts for April, May and June will continue to be traded until they expire.
| OUT OF FAVOUR |
| * Most of these 50 stocks that have been dropped by the NSE had turned illiquid, increasing the possibility of price manipulation |
| * NSE has removed a total of 68 stocks from the F&O segment this year, which is 26 per cent of the total number of stocks in the segment |
| * 184 scrips now remain in the segment |
| * The continued eligibility criteria for the stocks in the segment, will be that their market-wide position limit is not less than Rs 60 crore |
This year alone, NSE has removed a total of 68 stocks from the F&O segment, which is 26 per cent of the total number of stocks in the segment. After the removal of these 50 stocks, 184 scrips would remain in the segment.
As per the new Sebi guidelines, only the top 500 stocks based on average daily market capitalisation and average daily traded value in the last six months on a rolling basis will qualify for the segment.
Also, the stocks’ median quarter sigma order size over the last six months should not be less than Rs 5 lakh. Earlier, this limit was set at Rs 1 lakh. Quarter sigma order size is the order size required to cause a change in the stock value by one-fourth of its price. And the median of that value over a six-month period has to be Rs 5 lakh.
Even the market-wide position limit (MWPL) in the counter has been doubled to Rs 100 crore. MWPL is based on a mathematical formula devised by exchanges and the regulator.
“This will not only ensure that only highly liquid stocks are eligible, but also help bring down price manipulation. Many promoters got their stocks in the F&O segment and after the price rose, pledged their holdings for loans at inflated prices,” said S P Tulsian, an independent investment advisor.
According to sources, Sebi officials were interested in this matter because some of these stocks had shown a rise of over 100 per cent in a few trading sessions. For instance, Reliance Industrial Infrastructure Limited’s (RIIL’s) stock price had climbed 300 per cent in just three trading sessions this month. Apart from RIIL, in the past couple of weeks, S Kumar’s and Alok Industries have shown unnatural movement in their prices.
Sebi has also set a future course for stocks, once they are included in the segment. The continued eligibility criteria will be that MWPL is not less than Rs 60 crore.
Also, the stocks’ median quarter sigma order size over the last six months should not fall by Rs 2 lakh. Any stock that does not fulfil this criterion for three months will be excluded. Once removed, the stock cannot enter the segment for at least a year.
