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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Legal and Regulatory Environment

Under the SEBI framework for equity derivatives, which body is responsible for framing the eligibility criteria for introducing derivatives contracts on individual stocks, with the stock exchange applying them to the stocks it lists?

SEBI prescribes the eligibility criteria for introducing derivatives on individual stocks, covering aspects such as liquidity and market capitalisation. Exchanges must apply these norms to the stocks they list. Neither the RBI, the clearing corporation nor the listed company itself sets this criteria.

  1. ASEBI, which prescribes eligibility criteria that exchanges must followCorrect
  2. BThe Reserve Bank of India, through its monetary policy committee
  3. CThe clearing corporation, acting on its own discretion
  4. DThe individual listed company, by applying to the exchange

Explanation

SEBI prescribes the eligibility criteria for stocks in which derivatives may be introduced, such as market capitalisation, liquidity and free float conditions. Exchanges apply these norms and cannot dilute them. The RBI, clearing corporations and listed companies do not set these criteria.

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