Derivative markets are essential for price discovery and liquidity but can pose risks like market manipulation and volatility if not properly regulated. To address these concerns, SEBI issued updated guidelines in October 2023, revising the criteria for stocks entering and exiting the derivatives segment. As stated these revisions ensure that only high-quality stocks with sufficient market depth are traded in derivatives. Key changes include increased thresholds for market capitalization, trading volumes, and delivery values. Additionally, SEBI introduced a Product Success Framework (PSF) to further refine exit norms, ensuring stocks meet performance standards or face removal from the derivatives segment.
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