NSE, BSE drop Yes Bank from F&O segment from May 29

Leading stock exchanges BSE and NSE on Friday decided to drop Yes Bank from Futures and Options segment from May 29.

The existing Futures and Options contracts across all expiries will expire on May 28.

The development came after Yes Bank on Thursday was put under a moratorium, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board. 

In similar-worded circulars, the exchanges said, "The existing Futures and Options contracts, across all expiries shall expire on May 28, 2020. No Futures and Options contracts shall be available in Yes Bank for trading in equity derivatives segment from May 29, 2020 onwards". 

Derivatives markets or F&O segment reflect expectation of spot prices in the future, and current price bands or circuit filters are generally not applied on them. 

At present, there are over 200 stocks in F&O segment. 

Further, the bourses said due to the recent development in Yes Bank it has been decided that no fresh or renewal of bank guarantees and fixed deposit receipt issued by the private lender will be accepted as collateral. 

The existing benefit provided to members towards bank guarantees and fixed deposit receipts issued by Yes Bank in favour of their respective clearing corporations will be reduced. 

"Further, haircut in respect of shares of Yes Bank provided as collaterals shall be revised to 100 per cent with effect from begin day of March 6, 2020," the exchanges said. 

The RBI, in a notification, on Thursday said the financial position of Yes Bank has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. 

The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank, it added. 

The central bank has appointed former CFO of public sector lender State Bank of India Prashant Kumar as an administrator.

Photograph: Francis Mascarenhas / Reuters.