Sebi eases restrictions placed to curb Covid-induced volatility

Mumbai: The Securities and Exchange Board of India has decided to ease certain regulatory restrictions introduced in March to contain the spike market volatility following the sell-off triggered by the spread of Covid-19.

The regulator said measures taken with regard to stock futures and options and the increase in margin for non F&O stocks in cash market will be withdrawn from November 26. The restrictions introduced for index derivatives and flexing of dynamic price bands for F&O stocks will continue to remain in force till further directions, Sebi said.

“Based on market feedback and changed market environment, the above regulatory measures have been reviewed,” Sebi said in a circular on Wednesday.

To cut excessive speculation in stock futures and options, Sebi in March cut the market wide positions limits in these contracts to 50 per cent in a phased manner and increased cash market margins to 40 per cent in a phased manner. Besides, the regulator had allowed the dynamic price bands to be flexed only after a cooling-off period of 15 minutes.

For stocks that were not part of F&O with price band of 20 per cent and witnessing an intraday price movement of more than 10 per cent for three or more days then, the minimum margin was increased in a phased manner to as high as 40 per cent.