SEBI today in its circular announced the minimum contract size for equity derivatives from Rs.200,000 to Rs 5,00,000 effective from 30th October 2015 (Post October 2015 Expiry).
Minimum lot size for stocks reduced to 50 and in multiple of 25 there after. For high value stocks minimum lot size fixed at 10 and multiple of 5. Index minimum lot size fixed at 10 and multiple of 5 there after.
The stock exchanges shall review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month and wherever warranted, revise the lot size by giving an advance notice of at least 2 weeks to the market. Possibly New Lot size will be applicable from the post July expiry.
It is also stated in the circular that “The stock exchanges shall jointly ensure that the lot size is same for an underlying traded across exchanges.”
The move will prevent individuals and small traders from making themselves vulnerable to high-risk speculation. But on the other side it will put a full stop for small traders entering and trading the futures segment and participating in high risk naked options as the futures trading for them goes very expensive. Even the trade will be going to be expensive for full time traders and HNI clients. Also possibly this could drive large volumes to the illegal ‘dabba’ or off-market trade.
Do you think increasing the Minimum Contract Size in Equity Derivatives from 2 lakhs to 5 Lakhs will hurt your sentiment as a trader?
SEBI Circular : Review of minimum contract size in equity derivatives segment