SEBI issues Uniform Lot Size for Commodity Derivatives Contracts

Jan 24, 2019 | by Avantis RegTech Legal Research Team

On January 23, 2019, the Securities and Exchange Board of India (SEBI) has passed circular directing stock exchanges to follow a uniform trading and delivery lot size in Commodity Derivatives Markets.

As per International Organization of Securities Commissions (IOSCO) principles for Regulation and Supervision of Commodity Derivatives Markets, any deviation from the physical market should be closely examined to ensure that it does not constitute any barrier to delivery. Currently, in the derivatives market, it had been observed that stock exchanges kept different trading lot and delivery lot sizes for some commodity, making it difficult for participants thereby putting them in a disadvantageous position.

Based on this, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, SEBI with the recommendation from Commodity Derivatives Advisory Committee (CDAC) decided that there should be a uniform lot size for commodity derivatives contracts and all the recognized stock exchanges should follow this policy. SEBI may provide an exception on case to case basis, based on any feedback received from stakeholders for keeping different lot size with respect to any contact.

This Circular has come into effect from January 23, 2019. For existing contracts with different trading lot and delivery lot size, exchanges shall submit their proposal for alignment/exemption to SEBI within one month from the date of this circular in order to comply with the provisions of this circular.

[Circular No.- SEBI/HO/CDMRD/DNPMP/CIR/P/2019/023]




Related Updates

Alternate Text

Get updates on the go on RuleZbook Mobile App.