Sebi tightens criteria for moving derivatives stocks to physical settlement

The Securities and Exchange Board of India (Sebi) on Friday tightened the criteria for moving derivatives stocks to physical settlement.

The move follows a sharp swing in stocks belonging to frontline groups, amid concerns surrounding high share pledging in recent weeks. In a circular, Sebi said a stock will be moved to physical settlement from the new expiry cycle if any of the conditions are met.

These include intra-day movement of 10 per cent or more on 10 occasions in the last six months or three occasions in one month; or 25 per cent-plus intra-day movement on one occasion in a month. Recently, shares of several firms saw a drop of above 25 per cent in a single day. However, existing contracts will be settled under the prevailing mode, which in most cases is cash.

Securities and Exchange Board of India ( SEBI )