SEBI Revises Minimum Contract Size in Equity Derivatives to 5 Lakhs

SEBI today in its circular announced the minimum contract size for equity derivatives from Rs.200,000 to Rs 5,00,000 effective from 30th October 2015 (Post October 2015 Expiry).

Minimum lot size for stocks reduced to 50 and in multiple of 25 there after. For high value stocks minimum lot size fixed at 10 and multiple of 5. Index minimum lot size fixed at 10 and multiple of 5 there after.

It is also stated in the circular that “The stock exchanges shall jointly ensure that the lot size is same for an underlying traded across exchanges.”

The move will prevent individuals and small traders from making themselves vulnerable to high-risk speculation. But on the other side it will put a full stop for small traders entering and trading the derivative segment as the trading for them goes very expensive. Even the trade will be going to be expensive for full time traders and HNI clients. Also possibly this could drive large volumes to the illegal ‘dabba’ or off-market trade.

SEBI Circular : Review of minimum contract size in equity derivatives segment


SEBI revises the market lot and minimum lot value criteria. Minimum lot value revised to 5 lac. Minimum lot size for stocks reduced to 50 and in multiple of 25 there after. For high value stocks minimum lot size fixed at 10 and multiple of 5. Index minimum lot size fixed at 10 and multiple of 5 there after.At current nifty value  New Nifty index lot will be 60. Bank nifty will be 30

Problem with the Move

  • The biggest challenge is liquidity, which is critical, will go down and impact institutions’ ability to hedge their positions as cost of hedging will go up, which in turn would lead to increase in overall cost of trading and thus affecting the cash market.


  • The move was “anti-competitive” and would drive large volumes to the illegal ‘dabba’ or off-market trade. Brokers and analysts expect the move to make the equity derivatives market less active.
  • It will kill volumes and will become an institutional market,


By increasing it, you will discourage retail participation. The Idea should not be to make it difficult but create awareness.

This is the first time in 15 years that Sebi is proposing a review of the minimum contract size. The value of a contract is calculated by multiplying the futures price with the number of shares that should amount to Rs 2 lakh. The Nifty futures lot size is normally 25. The margin to buy or sell index futures is usually 10-15%.

Positive Outcome

Last time they did lot value to 5 lakhs was in 2002, The Biggest Bull Run for Indian Market started in 2003


  1. sourav ghosh said:

    i think govt. has taken this move to increase the volume of cash market trading and mutual funds……….reduce speculation and a major step to boost govt. revenue in terms of STT , etc. , since govt. revenue will be more in case of cash market delivery or intraday.
    However, BSE can take a contra bet to increase its turnover / volume.

    July 15, 2015
  2. Hiren said:

    Very bad move by SEBI. Dont know what it was thinking about…..does it want to drive the retail money to cash market…..and make sure the derivatives are used only by institutions ?

    As such trading ITM/ATM options was difficult, now they make it all the more costly and risky by this move. It will take a lot of money for me to short OTMs.

    July 14, 2015
  3. Chetan said:

    We may see bottom ard Oct 2015. Sir Pls correct me if I am wrong

    July 14, 2015
  4. Anand said:

    is it a preventive measure ….. seeing what is going on in china

    July 14, 2015
  5. Bramesh said:

    Please read the post again, clearly mentioned.


    July 14, 2015
  6. rkapoor41212 said:

    So if my understanding is correct only stock futures will have their lot sizes increased and the lot sizes of indices like Nifty and Bank Nifty will remain the same? Please confirm.

    July 14, 2015
  7. The initial margin will go up for nifty, probably to 35K plus, as such option trades will be more.


    July 14, 2015
  8. sandeep said:

    option trading by retailers may go up

    July 14, 2015
  9. Rakesh said:

    Oh my 1% Stop losses will be around 5 K to 8 K ..It increase the risk of carrying overnight. Intraday traders will also suffer

    July 14, 2015
  10. Prabhat said:

    Will it affect on option trading too?

    July 14, 2015
  11. Ragav said:

    Yes bank lot size is 250 now. 250*800 = Rs.2,00 ,000

    If it raised to Rs.5,00,000 per contract 5,00,000/800 = 625

    New lot size will be 625 Qty.

    Is my understanding correct sir?

    July 14, 2015
  12. sandeep said:

    Brahmesh, do u think it will impact the trades of retail guys too. like more vulnerable to big guys

    July 14, 2015
  13. Nikhil Patel said:

    25 lot size for nifty is such a good number …… gives soo much more flexibility for profit booking ….
    how will it help anybody by increasing lot sizes

    July 14, 2015

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