INSUBCONTINENT EXCLUSIVE:
SEBI has made changes in the "exercise mechanism" of option contracts on commodity futuresNew Delhi: Securities and Exchange Board of India
Advisory Committee of SEBI.The regulator in a circular said that the prescribed mechanism will be adopted by exchanges for exercise of the
options contracts on expiry.Under the mechanism, it said that All In the Money (ITM) option contracts will be exercised automatically,
unless 'contrary instruction' has been given by long position holders of such contracts for not doing so.Besides, All Out of the Money (OTM)
option contracts shall expire worthless, it added.All exercised contracts within an option series shall be assigned to short positions in
that series in a fair and non-preferential manner, the regulator said.The new framework will be effective from the date of new series of
to introduce trading in options on commodity futures and stipulated guidelines with regard to the product design and risk management
framework to be adopted for trading in options on commodity futures.
