India News Get -BusinessNSE F&O Batch Size | Changes in Lot Size of Nifty Nifty Bank Derivatives Contracts
Following market regulator SEBI’s order, the National Stock Exchange (NSE) has increased the lot sizes of its five index derivative contracts. The lot size of Nifty 50 has increased from 25 to 75, a 3x increase. The lot size of Nifty Bank has increased from 15 to 30.
NSE has increased the lot size of Nifty Financial Services, also known as End Nifty, from 25 to 65. At the same time, the lot size of Nifty Midcap Select has increased from 50 to 120. While the lot size of the Nifty Next 50 batch increased from 10 to 25.
This decree will come into force on November 20, 2024.
NSE said that from November 20, 2024, all index contracts will be issued in accordance with the amended rules. However, some monthly, quarterly and semi-annual contracts already issued will remain in their existing lot sizes until they expire.
Even though NSE has decided to change the lot size from November 20, but due to contracts issued before this date, the time frame for concluding the contract will vary depending on the new lot size. No contracts will be allowed to expire under the new batch size before January 2 next year. Additionally, there will be times when contracts with new and old bundles will be available at the same time.
Contract size increased to ₹15 lakh for index derivatives
To protect retail investors from losses, the Securities Exchange Board of India, i.e. SEBI, had issued a new circular on October 1 regarding futures and options (F&O). After this, NSE made changes to the batch site. SEBI’s new rules are based on the recommendations of an expert working group (EWG) to strengthen the framework for equity index derivatives.
Why has SEBI brought in new rules?
The derivatives market is quite risky. At present, SEBI’s concern is that the participation of retail investors is increasing. SEBI believes that investors are embarking on this process because they hope to earn very high profits.
However, most of these investors have no understanding of the derivatives market. The objective behind increasing the lot size in the name of SEBI is that only investors who are serious about the market should enter the derivatives market.
What are futures and options?
Futures and options (F&O) contracts are a type of financial instruments that allow an investor to take large positions in stocks, commodities and currencies with less capital. Futures and options are a type of derivative contracts with a fixed duration.
During this period, their prices change depending on the stock price. Futures and options on each stock are available in one lot size.