Sebi issues eligibility criteria for physical settlement of stock derivatives

Other eligibility criteria for the stock includes an intra-day movement of 25 per cent or above on one or more occasions in the past one month .

Further, if the maximum daily volatility of the stock exceeds 10 per cent either in equity or equity derivatives segment in the last one month, the stocks shall be physically settled, Sebi added.

The maximum daily volatility of the stock will be as estimated for "margining purpose".

The Securities and Exchange Board of India (Sebi) said the "exchanges shall review the above conditions on a monthly basis. Existing contracts on the stock, however, shall continue to follow the settlement mode as applicable at the time of contract introduction."

The directions are in line with the recommendations of the Secondary Market Advisory Committee (SMAC) of Sebi.

Earlier in December, the regulator issued a framework for making physical settlement of stock derivatives mandatory in a phased manner, to bring much-needed balance between equity cash and derivative segments.