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Physical settlement of stock derivatives

SEBI has decided that physical settlement of stock derivatives will now be compulsory and implemented in different phases. As per SEBI’s guidelines, NSE’s circular mentions 46 stocks which will be settled through compulsory physical delivery. If you hold a position in any of these contracts on the expiry date, you will have to give/take delivery of the stocks.

Keeping in mind the policy changes issued by SEBI and NSE, here are the changes that will be taking place at Upstox:

  • No physical settlement of derivatives contracts shall be permitted.
  • All open positions in the above contracts will be squared-off ONE day prior to the expiry at 2:30 p.m. by the Upstox RMS team. The position will be squared-off as per the market price at the time and no fresh positions will be allowed.
  • Fresh positions will not be permitted in these contracts on the expiry day.
  • After implementing the above mechanism, if the positions are not squared off for any reason (e.g: non-liquidity), then the contract would have to be settled physically and the client would be liable to pay the entire amount of the settlement.

Feel free to refer to the following circulars in case of any queries: