SEBI proposes changes in criteria for stock selection in F&O; check which stocks may enter or exit

The market watchdog SEBI has come up with a consultation paper for reviewing the eligibility criteria of stocks that can be included in the futures and options (F&O) segment. Securities and Exchange Board of India last in 2018 laid out the framework for shortlisting stocks that will be available for trading in the F&O segment.

Here are the proposed changes in the F&O segment:

The watchdog has proposed increasing Market Wide Position Limit (MWPL) to Rs 1,250 crore - Rs 1,750 crore given the sharp increase in overall m-capitalisation compared to 2018. In the current landscape, the stock’s MWPL on a rolling basis should be at least Rs 500 crore.

Market Wide Position Limit (MWPL) the bourses specify is the maximum number of open F&O contracts allowed for a stock. 

For inclusion in the F&O segment, the stock’s Average Daily Delivery Value (ADDV) in the cash market, in the previous six months on a rolling basis shall not be lower than Rs 10 crore. In the new framework, the regulator has proposed to increase this amount to Rs 30 crore-Rs 40 crore as the same has increased by 208 per cent since 2018.

While in the current regime, the MQSOS or Median Quarter Sigma Order Size of a stock over the last six months on a rolling basis should be at least Rs 25 lakhs, the SEBI now proposes the MQSOS to range between Rs 75 lakh to Rs 1 crore taking cognizance of the average market turnover which is 3.5 times more than 2018.

Further for the F&O trade, there has been no change in the rule wherein the stock’s average daily m-cap and average daily traded value in the last six months on a rolling basis should feature among the top 500 shares.

Stocks which may be included/excluded from F&O segment 

As per Zee Business Research desk, a total of 24 stocks may be ousted from the F&O segment, including the likes of Abbott India, Bata India, Granules India, Gujarat Gas, Metropolis
United Breweries, Sun TV and IPCA Labs among others.

While, stocks which may be included in the segment as per the new criterion are DMart, Zomato, Paytm, PB Fintech, Cochin Shipyard, BEML, BSE, Nykaa and LIC.