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SEBI Proposes New Rules for Options Trading
25 May
Summary
- SEBI introduces framework for options strike prices on exchanges.
- Goal is to improve trading continuity during high volatility.
- Public comments due by June 15, 2026.
The Securities and Exchange Board of India (SEBI) has put forth a new framework to standardize the introduction and management of strike prices for options contracts. This initiative aims to ensure that options trading continues smoothly and contracts remain accessible, particularly during periods of significant market volatility.
The market regulator's proposal, detailed in a consultation paper released on Monday, is part of its broader efforts to simplify business operations. SEBI observed that current exchange methodologies for strike intervals vary, sometimes leading to situations where underlying prices exceed the farthest available strike price, disrupting trading activity.
To counteract this, SEBI suggests that exchanges adopt a unified approach. This would involve listing a minimum number of in-the-money and out-of-the-money options, conducting daily reviews of strike prices near market levels, and removing those far from current prices. Exchanges will also have the flexibility to introduce new strike prices intraday in response to market movements, without requiring system changes from brokers.
SEBI is seeking public feedback on these proposals until June 15, 2026. The proposed framework is set to apply across all options segments, with exchanges allowed to tailor specific rules for different asset classes. Once implemented, a current provision under SEBI's Master Circular will be discontinued.
