India to Revert to Old Derivatives Settlement Method
Key Summary
India's securities regulator is set to restore a method that relies on the final 30 minutes of trading to settle equity derivatives on expiry days, effectively delinking the new closing auction from settlement of futures and options. This move is expected to bring stability to the market after a 4-year hiatus. The decision is a significant development for the Indian derivatives market, which has been subject to regulatory changes in recent years.
Restoration of Derivatives Settlement Method
India’s securities regulator is set to restore a method that relies on the final 30 minutes of trading to settle equity derivatives on expiry days, according to people familiar with the matter, effectively delinking the new closing auction from settlement of futures and options.
Regulatory Background
The move is a response to growing market concerns over the lack of a settled close for equity derivatives, which has led to increased volatility and trading costs.
Market Impact
The restoration of the method is expected to bring stability to the market after a 4-year hiatus, with market participants anticipating a decrease in trading costs and increased liquidity.
SEBI, Indian securities regulator, Indian derivatives market
Regulatory Enforcement
• India’s securities regulator is restoring a method to settle equity derivatives on expiry days.
• The move aims to bring stability to the market after a 4-year hiatus.
• The restoration is expected to decrease trading costs and increase liquidity in the market.