NSE to reintroduce ‘Do not exercise’ facility for stock option contracts
PremiumThe National Stock Exchange (NSE) will reintroduce the ‘Do not exercise’ instruction in stock options from April 28
The National Stock Exchange will reintroduce the ‘Do not exercise’ instruction in stock options from April 28, the stock exchange said in a circular on April 11.
“It may be noted that the facility to specify ‘Do not Exercise’ instruction on Expiry day will be reintroduced in Stock Option contracts with effect from April 28, 2022.The mechanism for introduction (file formats and timelines) will be the same as already specified in NCL circular reference NSCCL/CMPT/35635 dated August 22, 2017. It is reiterated that the introduction of DNE is only for Stock Option contracts," read the NSE circular.
Earlier this year, Zerodha co-founder Nithin Kamath expressed concerns over mandatory physical delivery for stock options and the removal of "Do not Exercise" (DNE) facility for options (especially buy options).
Stock futures and options in India were cash settled until October 2019, and since then, compulsory physical delivery on expiry was introduced.
DNE facility is expected to prevent risks around the physical settlement and will allow brokers to stop exercising option contracts on behalf of clients.
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