New SEBI F&O Criteria Implemented: 23 Stocks at Risk of Exclusion

The Securities and Exchange Board of India (SEBI) has introduced new eligibility criteria for stocks in the Futures and Options (F&O) segment, potentially impacting the inclusion of several stocks. According to a note from IIFL, the new criteria, which closely mirrors the proposal released on June 28, 2024, requires stock exchanges to update their rules and regulations accordingly. Under the new guidelines, stocks that fail to meet the criteria for three consecutive months on a rolling basis will be removed from the F&O segment.

Key Changes in SEBI's F&O Eligibility Criteria

SEBI's updated criteria introduce more stringent requirements for stocks to remain in the F&O segment:

Median Quarter Sigma Order Size (MQSOS): The minimum MQSOS has been increased to Rs 75 lakh, up from the previous Rs 25 lakh. This change ensures that only stocks with a higher median transaction value remain in the segment.
Market Wide Position Limit (MWPL): The MWPL has been raised to at least Rs 1,500 crore, a significant increase from the earlier threshold of Rs 500 crore. The MWPL indicates the maximum number of contracts that can be open at any time for a given stock.
Average Daily Delivery Value: The average daily delivery value in the cash market must now be at least Rs 35 crore, up from Rs 10 crore. This criterion reflects SEBI's focus on maintaining high liquidity and market stability.

Stocks at Risk of Exclusion from F&O Segment

Based on the new criteria, a total of 23 stocks are at risk of exclusion from the F&O segment. The following stocks are currently potential candidates for exclusion:

Laurus Labs (open interest of Rs 1,166 crore)
Ramco Cements (Rs 910 crore)
Deepak Nitrite (Rs 695 crore)
Atul Ltd (Rs 656 crore)
Torrent Pharmaceuticals (Rs 652 crore)
Chambal Fertilizers (Rs 640 crore)

Other stocks that could face exclusion include Gujarat Gas, Coromandel International, Granules India, Sun TV Network, Syngene International, City Union Bank, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Can Fin Homes, Bata India, Dr Lal PathLabs, Abbott India, United Breweries (UBL), IPCA Laboratories, Metropolis Healthcare, Indiamart Intermesh, Mahanagar Gas (MGL), and JK Cement.

Potential Inclusions in the F&O Segment

While some stocks are at risk of exclusion, others could potentially be included in the F&O segment under the new criteria. These stocks include:

Zomato
Adani Green
Jio Financial
DMart
Tata Technologies

Implications for Investors and Market Participants

The new SEBI guidelines aim to enhance liquidity, stability, and transparency in the derivatives market. By setting stricter criteria for the inclusion of stocks in the F&O segment, SEBI seeks to limit market manipulation and ensure that only highly liquid and actively traded stocks are available for trading.

Investors holding positions in the at-risk stocks should monitor developments closely, as exclusion from the F&O segment could impact liquidity and volatility. Market participants should also be aware that stocks meeting the inclusion criteria may present new opportunities as they enter the F&O segment.

[Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Investors are advised to conduct their own research or consult with a financial advisor before making any investment decisions. The information provided here is based on available data and may change as SEBI updates its rules and regulations.]