MUMBAI: The Securities and Exchange Board of India proposed compulsory physical settlement in stock derivatives contracts. In physical settlement, traders will have to take delivery of the shares against the derivatives position.The latest proposals are in addition to Sebi’s July discussion paper on growth and development of equity derivatives market in India. In the paper, the regulator had noted that trading turnover in equity derivatives has surged ten times in the past decade and the ratio of trades in equity derivatives to that of cash market has risen to over 15 times. The threat of physical delivery in stock derivatives would lead to better alignment between the cash and derivatives market. Nithin Kamat , chief executive of online broker Zerodha said, “Physical settlement of stocks on exercise of F&O will help broaden the markets and will be a boon for hedgers.

Source: Economic Times September 07, 2017 15:56 UTC