The Securities and Exchange Board of India (SEBI) has proposed a standardised framework for managing strike prices of options contracts to improve trading continuity and ease of doing business in derivatives markets. According to reports from Reuters, Essential Business Intelligence, The Economic Times, Informist Media, Business Standard, and The Hindu BusinessLine, the move seeks to ensure that options contracts are always available close to prevailing market prices, especially during periods of sharp intraday volatility. A strike price is the pre-determined price at which an options contract can be exercised. As per Mint, the regulator aims to standardize strike management across exchanges, ensuring that traders aren't left without relevant contracts when prices swing sharply during the day. The framework is specifically designed to enhance predictability and availability of options contracts in case of heightened intraday volatility for ease of trading in the derivatives segment.
In its consultation paper issued on May 25, 2026, SEBI noted that inadequate availability of strike prices near the current market level can disrupt trading activity when prices move sharply, leaving participants without suitable contracts to trade. As reported by Reuters, The Economic Times, Informist Media, Business Standard, and The Hindu BusinessLine, exchanges will be required to maintain a minimum number of in-the-money and out-of-the-money options contracts, and conduct daily reviews to ensure adequate availability of strike prices around the prevailing market level. The proposal specifically addresses situations where significant intraday volatility results in price movement beyond the farthest available strike price, inconveniencing market participants due to unavailability of options contracts around prevailing prices. The framework includes mandatory intraday introduction of new strike prices in the direction of market movements during trading hours. As per Mint, strike intervals directly affect trading activity and influence the operational systems of brokers, which need to load contracts into trading applications daily. Under the proposal, stock exchanges will have to create a comprehensive framework for introducing, reviewing and removing strike prices.
A key element of the proposal is the ability to introduce fresh strike prices intraday in the direction of market movement without requiring brokers or market participants to make system-level changes during live trading hours. According to the consultation paper, if the price of the underlying asset moves sharply during trading hours, exchanges must introduce new strike prices in real time to keep trading aligned with market conditions. As reported by Mint and Business Standard, such intraday additions should not require any changes to broker systems or participant infrastructure during live trading sessions. As per The Hindu BusinessLine, SEBI has proposed that exchanges should have a provision to introduce new strike prices for options contracts intraday during market hours, in the direction of price movement in the underlying. The operational rules—including strike intervals, the number of contracts to be issued, and whether wider intervals should be maintained for strikes farther from the prevailing market price—will remain at the discretion of exchanges. SEBI stated that exchanges should be able to add additional strikes during the trading day when market movements make existing contracts inadequate, allowing trading to continue more smoothly during sharp price swings. Exchanges will also need to periodically remove strike prices that are far away from the current market levels to ensure efficiency.
The proposed framework comes as index options trading faces significant headwinds from recent policy changes. Average daily premium turnover (ADPT) for Nifty and Sensex options fell to ₹90,044 crore across NSE and BSE during the 16 trading sessions leading up to May 25, representing a 13% decline from ₹1.04 trillion in March 2026, the final month before the 50% Securities Transaction Tax (STT) hike took effect from April 1. According to market data, while May ADPT was 2.1% higher than April levels, the substantial drop from March reflects the combined impact of higher taxation and reduced market volatility. 'Fear gauge' India VIX averaged 18.13% in May, down from 21.29% in March and 20.44% in April, as reported by The Hindu BusinessLine. Amit Chandra from HDFC Securities noted that the combination of STT hike and declining volatility has created a 'double whammy' effect impacting both NSE and BSE volumes from pre-war levels. The government's STT hike in Union Budget FY27 aims to discourage retail investors from options trading, with SEBI estimating that 9 out of every 10 individual investors lose money trading derivatives.
The proposed rules will apply across equity, currency and commodity derivatives segments, with exchanges having flexibility in designing operational details including strike intervals and the number of contracts based on liquidity and participation in different segments. As reported by Reuters and The Economic Times, the regulator has invited public comments on the proposal until June 15, 2026. The framework will require exchanges to publish the framework on their websites and review it periodically in consultation with market participants. The proposed norms would replace the existing clause related to rationalisation of strike intervals under SEBI's master circular on stock exchanges and clearing corporations issued in December 2024. At present, SEBI's regulatory framework primarily covers long-dated index options, while other segments, including stock, currency and commodity options, follow exchange-specific practices, leading to differences in how strike prices are introduced and managed. The framework aims to provide participants with suitable contracts to trade during volatile market conditions while maintaining operational efficiency. The proposal comes against the backdrop of differences in how India's two major exchanges, the National Stock Exchange of India and BSE, currently manage strike-price listings, with SEBI wanting to improve predictability and align market practices more closely.
