The National Stock Exchange has dropped Sterlite Optical Fibre from the list of stocks eligible for trading in the derivatives segment as the stock has failed to meet a key trading parameter.
Following a "correction" in its database for the last three months, the NSE realised that Sterlite Optical had fallen well below the cut-off median quarter sigma order size of Rs 5 lakh (Rs 500,000).
MQSOS is a crucial factor in determining the eligibility of a stock for derivatives trading. If the MQSOS falls below Rs 5 lakh in the past six months, the stock cannot be traded on futures and options, according to Securities and Exchange Board of India guidelines.
The NSE move has come as a surprise to the market because, according to NSE's own earlier published calculation, the stocks' MQSOS was a hefty Rs 23.14 lakh (Rs 2.31 million) for the three March contract series.
At any given time, there are three series of derivatives contracts outstanding in the market.
However, on Monday the NSE flashed "corrected" data putting the stock's MQSOS at Rs 2.64 lakh (Rs 264,000).
Chitra Ramkrishna, NSE's director (business operations) said, "We took a review in March for the first time after the Sebi guideline for selection of stock futures and options were announced." However, she said she was not aware of the earlier figures or the discrepancy.
Among other stocks where the data stands drastically "corrected", the MQSOS of VSNL has fallen from Rs 39.98 lakh (Rs 3.99 million) to Rs 4.21 lakh (Rs 421,000) for March contracts. And BSES stands "corrected" from Rs 27.97 lakh (Rs 2.79 million) to Rs 5.11 lakh (Rs 511,000).
Sebi announced the revised selection criteria on December 18, 2002. The Bombay Stock Exchange had to drop 12 stocks from its derivatives list last week as it failed to meet the criteria.
The sudden withdrawal of a stock from derivatives has left investors in the lurch. NSE on Monday revised the MQSOS of all the stocks and the difference between the earlier data and revised data is drastic. NSE has corrected the MQSOS for all the three months of Janauary, February and March 2003.
The MQSOS of VSNL has been corrected to Rs 6.35 lakh (Rs 635,000), Rs 4.51 lakh (Rs 451,000) and Rs 4.21 lakh (Rs 421,000), respectively, for January, February and March from its earlier calculation of Rs 42.10 lakh (Rs 4.21 million), Rs 39.73 lakh (Rs 3.97 million) and Rs 39.98 lakh (Rs 3.99 million), respectively.
Similarly, the MQSOS of BSES has been reduced to Rs 3.42 lakh (Rs 342,000), Rs 4.49 lakh (Rs 449,000) and Rs 5.11 lakh (Rs 511,000), respectively, from Rs 23.43 lakh (Rs 2.34 million), Rs 26.73 lakh (Rs 2.67 million) and Rs 27.97 lakh (Rs 2.79 million), respectively.
Going by Sebi's criteria, the stock should have been withdrawn from January onwards as the MQSOS was way below Rs 5 lakh (Rs 500,000), traders said.
"This wrong calculation has benefited a certain investor class," a dealer lamented.
In the case of HDFC, the MQSOS for January contracts stood at Rs 72.22 lakh (Rs 7.22 million), at Rs 74.28 (Rs 7.42 million) for February contracts and Rs 68.74 lakh (Rs 6.87 million) for March contracts. With Tuesday's correction this stands at Rs 13.20 lakh (Rs 1.32 million), Rs 14.75 lakh (Rs 1.47 million) and Rs 16.93 lakh (Rs 1.69 million), respectively.
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