The National Stock Exchange (NSE) announced on March 20 that five stocks will be removed from the Futures & Options (F&O) segment starting from the June series. These stocks include Apollo Tyres Ltd (NSE:APLO)., Deepak Nitrite Ltd (NSE:DPNT)., Escorts (NSE:ESCO) Kubota Ltd., MRF (NSE:MRF) Ltd., and The Ramco Cements (NSE:TRCE) Ltd.
These stocks will cease to trade in the F&O segment after May 27, which marks the expiry of the May derivatives contracts. While existing contracts for March, April, and May will continue to be available for trading, no new futures or options contracts will be introduced beyond May.
Why Are These Stocks Being Removed?
The eligibility of stocks for trading in the derivatives segment is determined by guidelines set by the Securities and Exchange Board of India (SEBI). The NSE’s decision aligns with these rules, ensuring that only stocks meeting strict liquidity and trading volume criteria remain available in the F&O market.
Why Does a Stock Exit From the F&O Space
As per SEBI guidelines, a stock is removed from the derivatives segment if it fails to meet the required eligibility criteria across all exchanges based on its performance in the cash market. However, if a stock qualifies on even one exchange, it remains eligible for F&O trading across all exchanges.
Additionally, stocks that remain under the F&O ban for an extended period (consistently for three consecutive months) may also be phased out from the segment. The exchanges take this step as part of market surveillance measures to maintain market stability and prevent excessive speculation.
Re-Entry Criteria for Excluded Stocks
Once a stock is removed from the F&O segment, it cannot be reconsidered for re-inclusion for a period of one year. If a stock later meets SEBI’s eligibility norms consistently for six months, it may be reintroduced, subject to SEBI’s approval.