SEBI proposes cleanup of derivatives rulebook, ease of business reforms for exchanges

New Delhi: The Securities and Exchange Board of India (SEBI) on Thursday proposed a clean-up of regulations governing exchange‑traded derivatives to reduce compliance burden on stock exchanges and to simplify market processes.

The regulator proposed merging, pruning and restructuring large parts of its master circulars covering equity, currency, interest rate and commodity derivatives to enhance ease of doing business for market infrastructure institutions, its consultation paper said.

It suggested getting rid of the "close‑to‑the‑money" option series in commodity options to reduce complexity and uncertainty for traders, adding that leading global commodity exchanges do not follow the CTM framework and rely only on in‑the‑money and out‑of‑the‑money options.

Traders might find it difficult to actually look into the intrinsic costs associated with the CTM options, the regulator said.

SEBI has invited public comments on the proposal till June 4, the statement said.

The market watchdog has proposed to reduce the mandated frequency of Product Advisory Committee meetings for non‑agricultural commodities to once a year. The regulator found that limited agenda items and difficulties in convening members justify the cut down to one annual meeting.

Exchanges, however, can convene meetings as required, the market regulator said in its proposal.

There is significant overlap among the eligibility norms in case of index futures, currency futures, currency options, such as requirement of prior approval from SEBI, separation of membership for brokers across segments, clearing through recognised Clearing Corporation, etc.

It also considered using exchange websites for disclosure of derivatives transactions instead of newspapers. Increasing discretionary powers of exchanges in tightening position limits and removing outdated norms on broker certification and capital requirements were among the other proposals.