Net settlement of cash and F&O segment upon expiry allowed

Mumbai: The Securities and Exchange Board of India (Sebi) has introduced the mechanism of net settlement of cash segment and futures and options (F&O) segment upon expiry of stock derivatives.

The move is aimed to provide better alignment of cash and derivatives segments, mitigation of price risk and bring in netting efficiencies for market participants.

Sebi said obligations arising out of cash segment settlement and physical settlement of F&O segment, upon expiry of stock derivatives, should be settled on net basis as against the current approach of settling such obligations separately.

The benefit of netting i.e. merged settlements would be available to investors whose trading member clears trades in F&O segment and cash segment through the same clearing member. However, those investors whose trading member clears through different clearing corporation will not be able to avail the benefit, Sebi said.