SEBI plans mini contracts induction in equity derivatives mrkt
SEBI suggests mini contracts in equity derivatives
Securities and Exchange Board of India (SEBI) intends to introduce mini contracts in the equity derivatives market on main indexes to improve liquidity and increase investor participation, reports Economic Times.Mini contracts are a fraction of normal derivatives contracts and help individual investors to hedge risks of a smaller portfolio. It is believed that popularity of mini contracts has been increasing globally due to the higher liquidity and the ability to get in and out of a trade quickly with low impact cost.SEBI also suggested the introduction of options contracts with longer tenures. At present the maximum life tenure of an options contract is three months. Introduction of options on futures on the existing interest rate products traded on exchanges has also been suggested by SEBI. The market regulator also suggested the creation of a bond index and derivatives on index on the lines of equity derivatives.
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