Money Maker Research Pvt. Ltd. is one of the best stock and commodity advisory in India. Get the best stock tips, commodity tips, option tips, nifty tips, call put tips, HNI MCX tips, intraday cash tips, stock option calls and share market tips. Register with us today to get two days free trial.

Monday, 11 September 2017

SEBI Introduces Physical Settlement in Derivative Segment - Money Maker Research

The market regulator SEBI is on the lookout of introducing physical-based settlement in the equity derivatives sector, which aims to reduce the disproportionate market speculation in the F&O market and to boost govt taxes by encouraging cash market trade, as per news.

In physical settlement, a buyer or seller of Future & Option contracts has the option to seek delivery of shares if the speculator tries to artificially enhance or suppress derivative prices. Presently, stock markets follow cash settlement, in which the Future & Option contract is settled by paying the difference between strike price and the value of underlying security, which is tend to manipulation.

In stock market trading, generally, there are two kinds of derivative contracts viz. futures and options. A futures contract implies a legally binding agreement to buy or sell the underlying security on a future date, whereas options contract offers the buyer or holder of the contract the right, but not the obligation, to buy or sell the underlying asset at a pre-determined price within or at end of a specified period. The buyers of a stock futures is not buying an underlying stock but merely an option to buy at a future date, which they seldom exercises, therefore the ‘cash settled’ futures transaction is necessitates no ownership obligation. 

India has come out as the second most speculative markets worldwide after South Korea. This has made the govt and SEBI to step on a path of caution. Moreover, it is expected that any surge in cash volumes in the derivative segment is possibly to give remarkable thrust to STT collection.


Post a Comment