INDIA: BSE Review of Minimum Contract Size in Equity Derivatives Segment

Tuesday July 21 2015

BSE has announced in continuation of Exchange notice number 20150713-29 regarding Review of Minimum Contract Size in Equity Derivatives Segment whereby SEBI circular CIR/MRD/DP/14/2015 dated July 13, 2015 informed stock exchanges to increase the minimum contract size in equity derivatives segments to Rs. 5 lakhs effective from the next trading day after expiry of October 2015 contracts.

In the view of the above, trading members have been requested to take a note of the following:

• The lot size for derivatives contracts in equity derivatives segment shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs. 5 lakhs and Rs. 10 lakhs.
• For Stock Derivatives if the market lot is not less than 50 then the lot shall be in multiples of 25.
• However, if the contract value of the stock derivatives at the minimum lot size of 50 is greater than Rs. 10 lakhs, then lot size shall be fixed in a multiple of 5, provided the lot size is not less than 10.
• For Index Derivatives the lot size (in units of underlying) shall be fixed as a multiple of 5, provided the lot size is not less than 10.
• Standardization of lot size shall be carried out every six months based on the average of the closing price of the underlying for last one month.
• The lot size revision will be carried out by giving an advance notice of at least two weeks to the market.
• If the revised lot size is higher than the existing one, it will be effective only for new contracts.
• If the revised lot size is lower but not in multiple of the existing one, it will be effective only for new contracts.
• Review of market lot of Equity Derivatives contracts shall be carried out by the Stock Exchanges in consultation with each other for an underlying traded across the Exchanges.

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