Supreme Court: Courts Have Sometimes Failed Arbitration, With Interference Curing No Disease  ||  Supreme Court: Co-Heir Cannot Sell Other Heirs' Shares as Karta After Intestate Succession  ||  SC: Casual Labourers With Temporary Status are Eligible For Pension Even Without Regularisation  ||  Supreme Court: High Courts Must Record the Nature of Crime and Allegations While Quashing FIRs  ||  Delhi HC Rejected Pernod Ricard’s Plea Against Denial of Wholesale Liquor License over Excise Case  ||  Gujarat HC: Lalita Kumari Ruling Does Not Permit Deceased’s Kin to Invoke Art 226 For FIR Failure  ||  Ker HC: Denying Disability Pension to Army Personnel Based on Unreasoned Medical Opinion is Invalid  ||  Kerala HC Directs Family Courts to Follow Calcutta HC Custody Guidelines Till State Rules Framed  ||  Allahabad HC Allows LIC Employees to Be Engaged as Census Enumerators and Supervisors For Duties  ||  Supreme Court Unveiled Victim Protection Plan For Trafficking Survivors and Urged Legal Reforms    

Options on commodity futures - product design and risk management- (Securities and Exchange Board of India) (03 Jan 2022)

MANU/SDER/0001/2022

Capital Market

1. SEBI vide Circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/55 dated June 13, 2017, permitted Commodity Derivatives Exchanges to introduce trading in Options on Commodity Futures and stipulated guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.

2. Based on feedback received from Stock Exchanges and the recommendations of Commodity Derivatives Advisory Committee of SEBI, it has been decided to make changes in the Exercise Mechanism of option contracts on commodity futures. Accordingly, the existing para 5 of Annexure 1 to the Circular dated June 13, 2017 stand deleted. The following new para 5 shall be incorporated in place of the deleted para:

"5. Exercise Mechanism:

On expiry, following mechanism shall be adopted by Exchanges for exercise of the options contracts:

5.1. All In the money (ITM) option contracts shall be exercised automatically, unless 'contrary instruction' has been given by long position holders of such contracts for not doing so.

5.2. All Out of the money (OTM) option contracts shall expire worthless.

5.3. All exercised contracts within an option series shall be assigned to short positions in that series in a fair and non-preferential manner."

3. Other guidelines prescribed in aforesaid SEBI Circular dated June 13, 2017 shall remain unchanged

4. The Circular shall be effective from the date of new series of commodity derivatives launched on or after February 1, 2022 and exercise mechanism for Options on Futures referred to in any other guidelines prescribed by SEBI shall be as per the instant Circular.

5. The Exchanges are advised to:

i. take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the same,

ii. bring the provisions of this circular to the notice of the members of the Exchange and also to disseminate the same on their website,

iii. communicate to SEBI, the status of the implementation of the provisions of this circular.

6. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Tags : OPTIONS   COMMODITY FUTURES   RISK MANAGEMENT  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved