DERIVATIVES

S. No. CIRULAR NO. DATED

NORMS PRIVALING

1 1)FITTC/DC/CIR-1/98 2) SMD/DC/Cir-17/2003/10/29 16/6/1998

2 FITTC/DC/1847/98 26/6/1998

3 1)EC.CO.FII/11.01.01(16)/2000-01 2) SMD/DC/CIR-11/02 12/2/2002

4 SMD/DC/Cir-17/2003/10/29 29/10/2003

12/2/2002

29/10/2003

5 NSE/CMPT/15158 7/7/2010

6 Mid month day BSE

7 Price Bands BSE

8 SMDRP/DC/CIR- 7/01 20/6/2001

 9 SMDRP/DC/Cir-7/01 20/6/2001

10 SEBI/DNPD/Cir-26/2004/07/16 16/07/2004

11 1)SMDRP/DC/CIR-7/01 2)SEBI/DNPD/Cir-33/2007 27/10/2010

12 CIR/DNPD/ 4 /2010 15/07/2010

13 MIR&SD/DR-1/MSS/CIR-08/2004 20/1/2004

14 SEBI/DNPD/Cir-33/2007 27/12/2007
COMPLIANCES

15 SEBI/DNPD/Cir- 20/2004/02/23 23/02/2004

16 SEBI/DNPD/Cir- 38 /2008 6/8/2008

1)SMD/DC/CIR-112/02 13/5/2002
17 2)SMD/DC/ 5413 /03

18 SMD/DC/CGM/CIR-6/01 20/6/2001

19 SMD/DC/CIR.9/01 24-8/2001

20 MRD /DoP/SE/Cir-13/2008 5/5/2008

21 DNPD/Cir-48/2009 13/11/2009

22 DNPD/Cir-50/2010 8/1/2010

23 MIRSD/Cir.No 02/2010 18/1/2010

CLIENT REGISTRATION NORMS

FITTC/DC/CIR-3468/98 3/12/1998
24 SMDRP/DC/CIR-14/02 18/12/2002

25 SEBI/MIRSD/DPS-1/Cir-31/2004 26/8/2004
Annexure I
Annexure 2
Annexure 3
Annexure 4
Annexure 5

GENERAL OBLIGATIONS AND RESPONSIBILITIES

26 Regulation 17 – 18

27 Overview BSE

28 Circular No.21
SUBJECT/OBJECTIVE Issued by

Exchanges willing to start derivativs trading may submit their application to SEBI for
its consideration SEBI

NSE's Certification in Financial Markets (NCFM) derivative broker/dealers and

salespersons submitted vide letter No.NSE/F&O/6180. Decision will be maid by the
the committee set up by the SEBI SEBI

RBI permitted the Foreign Institutional Investors(FIIs) to trade in F&O segment of

NSE provided the overall open interest of the FII would not exceed 100% of Market
value of the concerned FII's total investment SEBI

The open position for all derivative contracts would be valued as the open interest
multiplied with the closing price of the respective underlying in the cash market SEBI

On FII position limits in equity index Derivatives (MODIFIED): 1.In option

contract-On a particuler underlying index shall be Rs 250 crores or 15% of the total
open interest of the market index options(which ever is higher), 2.In future
contracts-same as above SEBI

SEBI approved the recommendations of the RMG regarding derivative contracts

and mandated that these measures could be implemented by SEBI at an appropriate
time SEBI

Revised Exposure Margin for Exchange Traded Equity Derivatives NSE

Changes in derivative segment and release of FII mid month update

There are no maximum and minimum price ranges for Futures and Options
Contracts. However, to avoid erroneous order entry, dummy price bands have been
introduced in the Derivatives Segment. Further, no price bands are prescribed in the
Cash Segment for stocks on which Futures & Options contracts are available for
trading. Also, for those stocks which do not have Futures & Options Contracts
available on them but are forming part of the index on which Futures & Options
contracts are available, no price bands are attracted provided the daily average
trading on such indices in the F & O Segment is not less than 20 contracts and traded
on not less than 10 days in the preceding month.
BSE

Derivative exchanges/Segment shall submit their proposal for approval of the Index
option contarct to SEBI which shall include: the details of the proposed derivative
contract to be traded (e.g; Symbol, Underlying Multiplier, margin, trading hours etc.) SEBI
Derivative/Segment shall submit their proposal for approval of the stock option
contract to SEBI which shall include: the details of the proposed derivative contract
to be traded (e.g; Symbol, underelying etc. ) SEBI

Risk containment measures and the broad eligibility criteria of stocks on which
stock options and single stock futures could be introduced.And containment
measures and board eligiblity critaria. SEBI

It has been decided to provide flexibility to Stock Exchanges to offer either

European style or American style stock options SEBI

Physical Settlement of Stock Derivatives: a.

Cash settlement (settlement by payment of differences) for both stock options and
stock futures; or
b. Physical settlement (settlement by delivery of underlying stock) for both stock
options and stock futures; or
c. Cash settlement for stock options and physical settlement for stock futures; or
d. Physical settlement for stock options and cash settlement for stock futures. SEBI

Partcipation of Banks in interest rate Derivatives market. It is conforred u/s 11 (1)

of the SEBI Act, 1992, read with section 10 of the Securities and Contract
(regulation ) Act, 1956 to protect the interest of the investors and to regulate the
securities market. SEBI

Introduction of mini derivative (Futures & Options) contract on Index (Sensex & Nifty)

Minimum contract size for Exchange traded derivative contracts. A derivative

contract shall have a value of not less than Rs. 2 Lakhs at the time of its introduction
in the market SEBI

Exchnage traded currenncy derivatives. In this circuler the eligiblity norms for
exchanges, clearing houses, SEBI

Monthly Activity Report (MAR) from may, 2002 onwards least by the 7th of the
following month. SEBI

Daily reports for trading and settlement of Derivative trades. It is required to

submited with the Sr. Executive Director, IES with a copy to the Divison Cell. SEBI

Reporting of Derivative Transactions to media and the newspapers. And it is to be

done on the Daily bases. SEBI

Cross margin across Exchange traded Equity (cash) and Exchange traded
Equity Derivative (derivatives) segments. SEBI
Expiry date for Derivarive Contracts. SEBI

Standardized lot size for Derivative contracts on Individual Securities. The lot size
for an underlying with price of Rs. 250,i.e., in the price band of Rs.201-400, shall be
1,000 units. The stock Exchange shall review the lot size once in every 6 months
based on the clossing price of the underlying for last one month and wherever
warranted, revise the lot size by giving an advance notice of atleast 2 weeks to the
market . SEBI

Mandatory requirement of 'IN-PERSON' verification of Clients SEBI

1.Client registration form, 2.clearing member -trading member Agreement, 3.

Risk disclosure document for derivatives SEBI

Uniform Documentary requirements for Trading SEBI

1.Client Registrtion Form
2.Member Client Agreement
3.Modal Tripartite Agreement
4.Uniform Risk Disclosure Document
5.Broker-sub broker agreement

To maintain proper books of accounts, records etc

SEBI

1-Every stockbroker shall keep and maintain following books of accounts, records
and documents namely:- (a)Register of
transaction, (b)Client register, (c)General ledger, (c)Journals, (d)Cash book, (e)Bank
passbook, (f)Documents register, (g)Members' contract books, (h)Duplicates of
contract notes issued to clients, (j)Written consent of clients,(k)Margin deposit book,
(l)Registers of accounts of sub- brokers, (m)An agreement with a sub- broker
specifying scope of authority and responsibilities of Stock Broker and such sub-
broker,
2-Place where books of accounts, records and documents are maintained shall be
intimated to SEBI
3-Every stock- broker shall, within 6 moths from close of accounting period, furnish a
copy of the audited balance sheet and profit and loss account to SEBI
4-Where it is not possible to furnish the above documents within the time specified,
SEBI shall be kept informed of the same together with reasons thereof and period
within which it would be furnished
5-Books of account and other records shall be preserved for a minimum period of five
years

Derivatives Membership Guide BSE

Securities Trading Using Wireless Technology BSE