On Monday, August 12, the National Stock Exchange (NSE) prohibited trading in fifteen equities in the futures and options (F&O) segment due to their surpassing 95% of the market-wide position limit (MWPL).
These equities will, nevertheless, be traded on the cash market. Every day, the NSE updates the list of securities that are prohibited from trading in F&O.
The 15 stocks on the NSE’s F&O ban list on August 12 include Aditya Birla Capital, Aditya Birla Fashion and Retail, Bandhan Bank, Biocon, Birlasoft, GNFC, Granules India, Hindustan Copper, India Cements, IndiaMart, LIC Housing Finance, Manappuram Finance, PNB, RBL Bank, and SAIL.
According to the NSE, the derivative contracts about these assets have entered the stock exchange’s prohibition period after surpassing 95% of the market-wide position limit.
“All clients/members shall trade in the derivative contracts of said security only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action,” the NSE statement said.
When stock exchanges place F&O contracts in a certain stock during the ban period, no new positions are permitted.
The Securities and Exchange Board of India’s (Sebi) proposed regulations for futures and options (F&O) trading might have a severe impact on stock exchanges and brokers that serve individual traders, with market volumes likely to drop by 30–40%.
In July, Sebi released a consultation paper outlining seven proposed measures: raising the minimum contract size and collecting option premiums upfront; monitoring position limits within the day; rationalizing strike prices; eliminating the calendar spread benefit on the day of expiration, and raising the near contract expiry margin.
It said that the objectives of these actions are to strengthen investor protection and advance derivatives market stability.
Compared to traditional full-service brokers, discount brokers are projected to be more impacted because they rely more on retail investors.
