New Delhi, May 25 (PTI) Capital market regulator Sebi on Monday proposed a comprehensive framework for the introduction and ongoing management of strike prices in options contracts to ensure the availability of contracts during periods of sharp intraday market volatility.
In a consultation paper, Sebi said significant volatility in underlying or futures prices can lead to market movements beyond the farthest available strike price, causing inconvenience to market participants due to the non-availability of options contracts around prevailing market levels.
To address this issue, the regulator proposed that stock exchanges put in place a framework governing the introduction and management of options contracts.
Under the proposed framework, exchanges will formulate rules for a minimum number of in-the-money and out-of-the-money options contracts and undertake daily reviews of strike prices around prevailing market levels.
Stock exchanges will also review existing strike prices daily to eliminate contracts that are significantly away from prevailing market prices, as per the consultation paper.
Further, Sebi has proposed that exchanges should have provisions for intraday introduction of new strike prices during market hours in the direction of movement of the underlying asset.
The regulator said such intraday introduction of options contracts should not require any system-level changes by stock brokers or market participants during live trading operations.
According to Sebi, the operational modalities, including strike intervals, number of contracts to be introduced and wider intervals for contracts far away from the prevailing market price, will remain at the discretion of individual exchanges.
The proposed framework will apply across all options segments, including equity, currency and commodities, with exchanges allowed to adopt different rules depending on liquidity and participation in specific sub-segments.
Sebi has also proposed the discontinuation of an existing clause related to the rationalisation of strike intervals for long-dated index options after operationalisation of the new framework.
The Securities and Exchange Board of India (Sebi) has invited public comments on the proposals until June 15, 2026.