Sebi signals change with tougher futures and options stock rules

New framework may displace low-turnover stocks, introduce market heavyweights

The Securities and Exchange Board of India (Sebi) has proposed stricter eligibility criteria for adding and retaining stocks in the futures and options (F&O) segment, which accounts for the bulk of the trading volumes. The proposal—which comes six years after the securities regulator last revised the stock selection framework---is much awaited by the market players as the derivatives stock list has largely remained stagnant for the last two years. Currently, about 182 stocks are eligible to trade in the derivatives segment down from a peak of 209 in 2018.

The proposed framework, if implemented, could lead to the removal of