SEBI considers circuit filters on stocks traded in F&O segment
In a move to check wild stock swings, markets regulator Securities and Exchange Board of India (SEBI) is planning to overhaul the derivatives segment.
The proposals under consideration include circuit filters on stocks traded in the futures and options (F&O) segment, possible changes in the market-wide position limits and review of margining system, a person familiar with the development said.
It is believed that the swift and massive fall on January 22 shook SEBI into action. Trading was halted within minutes of opening, as indices hit the downward limits on very low volumes. SEBI has also received several suggestions from market intermediaries on how the loopholes in the current system can be plugged.
Apart from the margining system, the large number of stocks in the F&O segment was also said to have contributed to the indices going into a free fall. “SEBI officials had a long discussion with many market players, including BSE and NSE representatives,” says the source. “
There were suggestions to overhaul the derivatives segment to counter speculative activity. One of the proposals was introduction of circuit filters on stocks available in the F&O segment,” he added. Currently, stocks in which futures are available have no circuit filters on the cash side.
