The Securities and Exchange Board of India (Sebi) has brought an end to the random revision of the lot sizes for individual stocks that make a derivative contract by standardising the lot size for derivative contracts.
According to the new circular that comes into effect on March 31, the lot size of a contract will depend on the price bracket that the stock’s value falls in, and it will put an end to the random revision of lot sizes of derivative contracts for individual securities.
“In consultation with stock exchanges, it has been decided to standardise the lot size for derivative contracts on individual securities,” said a Sebi circular.
A lot size is a minimum number of units of an individual stock that makes a derivative contract.
Sebi has made eight categories of lot sizes based on the share price of the underlying securities.
For stocks trading between the price value of Rs 25 and Rs 50, the number of underlying units that will make a lot will be 8,000, whereas at the upper end where the share price of a security is over Rs 1,601, the number of underlying units that will make a lot is 125.
“Stock exchanges will review the lot sizes every six months based on the average of the closing price of the underlying units for the last one month,” said the circular.