Derivatives trading volumes may recover after settlement rule changes, analysts say
From December 7, derivatives contracts on expiry days will once again be settled using the volume-weighted average price of the last 30 minutes of regular trading
The Indian markets regulator, Securities and Exchange Board of India (SEBI), has decided to revert to the volume-weighted average price method for settling derivatives contracts on expiry days, beginning December 7. This move is expected to reduce volatility and help revive trading volumes, according to analysts. The decision comes after the introduction of the closing auction session (CAS) on August 3, which led to sharp swings in stock and index levels and a decline in trading activity.
Total derivatives turnover on the National Stock Exchange of India fell 19.2% month-on-month to 34.48 trillion rupees ($363.37 billion) in August, adding to the impact of tighter regulations on lending to proprietary traders and higher transaction taxes. Analysts now expect volumes to return to pre-CAS levels, although the extent of the recovery remains uncertain.
Brief written by urgent.news from Hindu BusinessLine's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
