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What is the story about?
Shares of Polycab (India) Ltd. fell as much as 5% in reaction to their exclusion from the Futures & Options (F&O) segment on Tuesday, October 13. The stock will be excluded from the segment starting December 30.
This means that existing contracts that run through the October, November and December series will continue to trade until their respective expiries, while no new contracts will be issued after December 30.
All existing positions will have to be squared off on the date of the maturity of the final contract.
According to guidelines issued by Market Regulator Securities & Exchange Board of India (SEBI) and the National Stock Exchange, a stock needs to meet multiple criteria to be eligible for inclusion in the derivatives segment.
The criteria range from liquidity metrics, Market-Wide Position Limits, Corporate Governance or IBC isssues and / or corporate restructuring and delisting.
In case a stock is admitted to the insolvency and Bankruptcy (IBC) framework or under the NCLT proceedings, the stock is automatically moved to restrictive trading categories, thereby making it ineligible to trade in the F&O segment.
The stock must also maintain an average Market-wide Position Limit (MWPL) threshold of ₹1,500 crore under the revised SEBI norms.
The stock's minimum order size to cause a standard price change must also stay above prescribed levels and trading volumes in the cash market must remain robust as well.
In case a stock is excluded from the F&O segment, it cannot be re-included in it for a period of 12 months and post which it meets every criteria prescribed above. The criteria should be satisfied for six months in a row.
Once the exchange's Risk Management Committee verifies that the security consistently satisfies all quantitative and qualitative parameters, standard derivative contracts are reintroduced.
The removal of Polycab comes five years after it was included in the derivatives segment starting the September F&O series of 2021.
In an exchange filing on Friday, Polycab had informed that the National Company Law Appellate Tribunal, has stayed and kept in abeyance, the order passed by the National Company Law Tribunal (NCLT) on October 7, for the admission of Corporate Insolvency Resolution Process against Polycab in the matter of Asier Metals Pvt. Ltd. Vs Polycab India Ltd., under Section 9 of the IBC over an alleged operational debt of ₹2.79 crore.
Following this, Polycab has been placed under IRP Stage 0 for trading, where trading continues at the normal pace and fresh buying is not blocked by retail brokers.
Shares of Polycab India are trading 4.8% lower on Tuesday at ₹7,993. The stock has trimmed its year-to-date advance down to just 4%.
This means that existing contracts that run through the October, November and December series will continue to trade until their respective expiries, while no new contracts will be issued after December 30.
All existing positions will have to be squared off on the date of the maturity of the final contract.
When Does A Stock Get Excluded From F&O?
According to guidelines issued by Market Regulator Securities & Exchange Board of India (SEBI) and the National Stock Exchange, a stock needs to meet multiple criteria to be eligible for inclusion in the derivatives segment.
The criteria range from liquidity metrics, Market-Wide Position Limits, Corporate Governance or IBC isssues and / or corporate restructuring and delisting.
In case a stock is admitted to the insolvency and Bankruptcy (IBC) framework or under the NCLT proceedings, the stock is automatically moved to restrictive trading categories, thereby making it ineligible to trade in the F&O segment.
The stock must also maintain an average Market-wide Position Limit (MWPL) threshold of ₹1,500 crore under the revised SEBI norms.
The stock's minimum order size to cause a standard price change must also stay above prescribed levels and trading volumes in the cash market must remain robust as well.
What Happens To A Stock On Exclusion From F&O?
In case a stock is excluded from the F&O segment, it cannot be re-included in it for a period of 12 months and post which it meets every criteria prescribed above. The criteria should be satisfied for six months in a row.
Once the exchange's Risk Management Committee verifies that the security consistently satisfies all quantitative and qualitative parameters, standard derivative contracts are reintroduced.
The removal of Polycab comes five years after it was included in the derivatives segment starting the September F&O series of 2021.
In an exchange filing on Friday, Polycab had informed that the National Company Law Appellate Tribunal, has stayed and kept in abeyance, the order passed by the National Company Law Tribunal (NCLT) on October 7, for the admission of Corporate Insolvency Resolution Process against Polycab in the matter of Asier Metals Pvt. Ltd. Vs Polycab India Ltd., under Section 9 of the IBC over an alleged operational debt of ₹2.79 crore.
Following this, Polycab has been placed under IRP Stage 0 for trading, where trading continues at the normal pace and fresh buying is not blocked by retail brokers.
Shares of Polycab India are trading 4.8% lower on Tuesday at ₹7,993. The stock has trimmed its year-to-date advance down to just 4%.
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