SEBI Proposes New Method to Prevent Stock Manipulation in Derivatives Market

The Securities and Exchange Board of India (SEBI) has proposed a major change in the way open interest (OI) is calculated in the equity derivatives market.

- AGENCIES

In a statement, the regulator suggested moving to a 'Future Equivalent' method instead of the current notional value-based calculation.

This shift aims to prevent stocks from being unfairly pushed into the ban period due to manipulation.

SEBI explained that the existing notional value method adds up the total value of all futures and options contracts without considering the actual market risk.

This can sometimes make a stock appear heavily traded and trigger a ban even when the risk is not significant.