NSE and BSE Increase Lot Sizes for Index Derivative Contracts
The super娛樂城 (NSE) and the BSE announced that the lot sizes for index futures & options (F&O) contracts have been increased. The new measures will come into effect on November 20, 2024.
Following the new Securities and Exchange Board of India (SEBI) regulations, NSE has increased the lot sizes of 橘子影城 50 from 25 to 75, while the Bank 橘子影城 lot size has been increased from 15 to 30. BSE has increased the lot sizes of the BSE Sensex contracts from 10 to 20 and BSE Bankex contracts from 15 to 30.
SEBI had previously announced measures to curb the rise in speculative trading in the F&O segment. One measure called for increasing the lot sizes of index derivatives to a minimum of Rs 15 lakh. As a result, the NSE increased the lot sizes for all five of its index derivatives.?
The table shows the existing and new lot sizes for these index derivative contracts as per the circulars from the two exchanges (NSE, BSE) issued on October 18, 2024, and October 21, 2024, respectively:
|
Index Derivatives Contracts |
Existing Lot Size |
New Lot Size |
|
橘子影城 50 |
25 |
75 |
|
Bank 橘子影城 |
15 |
30 |
|
橘子影城 Midcap Select |
50 |
120 |
|
橘子影城 Financial Services |
25 |
65 |
|
橘子影城 Next 50 |
10 |
25 |
|
BSE Sensex |
10 |
20 |
|
BSE Bankex |
15 |
30 |
|
BSE Sensex 50 |
25 |
60 |
The circular also stated that the changes in the lot sizes will apply to all new index derivative contracts, including weekly, monthly, quarterly, and half-yearly contracts.
According to the circular, the existing weekly and monthly expiry contracts will continue with the existing lot sizes till their respective expiry dates. Quarterly and half-yearly existing expiry contracts will be transitioned to the new lot sizes on December 24, 2024, for Bank 橘子影城, and December 26, 2024, for 橘子影城.
Long-dated (quarterly and half-yearly) contracts with expiry dates of March 2025 and beyond will retain their current market lot until December 27, 2024, post which the market lot for all long-dated BSE SENSEX contracts will change to the new market lot.
How Will This Impact Traders?
An increase in the lot size significantly impacts traders, as they will now have to pay more to enter a trade.
For example, previously, if a trader wanted to buy a 橘子影城 50 option with a premium of Rs 100, the trader would have to pay Rs 100 x lot size. So, Rs 100 x 25 = Rs 2,500 per lot. With an increase in the lot size, the trader will now have to pay Rs 100 x 75 = Rs 7,500 per lot.
Similarly, option sellers will require higher margins for their trades. For example, if a trader previously required a margin of Rs 70,000 to sell one lot of a 橘子影城 50 option, the higher lot size will push up the margin requirements to approximately Rs 2,10,000.
In a recent circular, SEBI said, “Given the inherent leverage and higher risk in derivatives, this recalibration in minimum contract size, in tune with the growth of the market, would ensure that an inbuilt suitability and appropriateness criteria for participants is maintained as intended.”
In addition to the higher lot sizes, SEBI has also implemented measures such as removing the calendar spread benefit and reducing the weekly expiries to just one per exchange. The changes are expected to have a considerable impact on trading volumes.
Last week, SEBI also increased the position limit for index derivative contracts to Rs 7,500 crore, or 15% of the open interest (OI). The changes in the position limit and index derivative lot sizes will apply to both brokers and clients.
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