Stock Exchanges in IFSCs May Permit Trading in Equity Derivatives: SEBI

By Dayafter Bureau, Agencies

The Securities and Exchange Board of India (Sebi) on Thursday said stock exchanges operating in international financial services centres (IFSCs) may allow dealing in equity derivatives.

“Based on the recommendations of the Risk Management Review Committee of SEBI, it has been decided to specify derivatives on equity shares of a company incorporated in India as permissible security,” the market regulator’s circular said.

“…the recognised stock exchanges operating in IFSCs may permit dealing in derivatives on equity shares, subject to prior approval of Sebi,” it added.

According to the circular, the Market Wide Position Limit (MWPL) for “derivatives on equity shares” will be equal to 10 per cent of the number of shares held by non-promoters in the relevant underlying security (free-float holding).

Further, the MWPL for “derivatives on equity shares” in recognised stock exchanges in IFSCs would be reckoned separately from that in recognised stock exchanges in domestic market, the circular said.

“Sebi’s circular to allow trading in equity derivatives of a company incorporated in India by stock exchanges operating in IFSCs is a welcome move and will allow the IFSCs to move ahead at an even faster pace,” said Ajay Pandey, MD and Group CEO, GIFT City.