SEBI Lowers Turnover Threshold For Agricultural Commodity Options To Rs 100 Crore
The Securities and Exchange Board of India (SEBI) has announced change in the regulatory requirements for launching options contracts on agricultural and agri-processed commodities. Effective from June 1, 2024, the average daily turnover requirement for these futures contracts has been reduced from Rs 200 crore to Rs 100 crore. This decision was based on representations...
The Securities and Exchange Board of India (SEBI) has announced change in the regulatory requirements for launching options contracts on agricultural and agri-processed commodities. Effective from June 1, 2024, the average daily turnover requirement for these futures contracts has been reduced from Rs 200 crore to Rs 100 crore. This decision was based on representations from market participants and discussions by SEBI's Commodity Derivatives Advisory Committee (CDAC).
According to the new guidelines, stock exchanges can now introduce options on agricultural and agri-processed commodities futures if these futures have maintained an average daily turnover of at least Rs 100 crore over the preceding twelve months. For other commodities, the average daily turnover requirement remains unchanged at Rs 1,000 crore.
The circular outlines several key points:
1. The circular revises Chapter 6 of the SEBI Master Circular for Commodity Derivatives Segment which focuses on the Product Design and Risk Management Framework for Options on Commodity Futures.
2. The revised paragraph 6.1.2 of the Master Circular now states that options would be permitted for trading on a stock exchange only if the underlying commodity futures traded on the exchange's platform meet the new turnover criteria.
3. The circular stats that these changes apply to all options on futures contracts for agricultural and agri-processed commodities introduced on or after June 1, 2024, provided the average daily turnover of the underlying futures contracts during the previous twelve months is Rs 100 crore.
SEBI has directed stock exchanges to amend their bye-laws, rules, and regulations to implement these changes. Exchanges are also required to inform their members and disseminate the circular's provisions on their websites. Section 11(1) of the Securities and Exchange Board of India Act, 1992 empowers the regulator to protect investor interests and promote the development and regulation of the securities market.
Click Here To Read/Download Circular