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The market regulator, the Securities and Exchange Board of India (SEBI), has introduced a significant proposal aimed at further streamlining the process of futures trading—specifically, Futures and Options (F&O) trading. Traders often face considerable difficulty in selecting the appropriate "strike price" during periods of sudden and severe market volatility. To address this specific issue, SEBI has put forward a new proposal. Under this proposal, stock exchanges will be granted the autonomy to instantly add or remove new strike prices in real-time, in response to prevailing market movements. This will directly benefit traders, ensuring they continue to have trading options available even amidst high volatility, thereby enabling them to execute their trades at the correct price points in alignment with market trends.

**Traders' Biggest Challenge During High Volatility**

A "strike price" is the specific rate at which a trade involving a particular stock or index is executed. Typically, traders select their strike prices by gauging the market's general sentiment, aiming to safeguard their investments against significant risks. However, the real difficulty arises when the market experiences a sudden, sharp surge or a steep decline on any given day. For instance, suppose the Nifty index is trading at the 25,000 level. In such a scenario, traders typically have a range of strike prices readily available to them, spanning from 24,900 and 25,000 up to 25,100.

However, if a major news event triggers a sudden surge, causing the Nifty to jump abruptly to the 25,700 level, the corresponding new strike prices may simply not be available at that level. In this situation, traders are unable to find the specific options contracts that align with their trading strategies. SEBI has formulated this new draft proposal specifically to resolve this issue at its very root.

**New Contracts Can Be Added During Live Market Hours**

Once SEBI's new proposal is implemented, if the market experiences a sudden and significant movement during trading hours, new strike prices can be added dynamically while live trading is in progress. This effectively means that investors will have a sufficient array of options available to them, enabling them to execute trades that are perfectly aligned with the prevailing direction of the market. All exchanges must ensure that a sufficient number of In-the-Money (ITM) and Out-of-the-Money (OTM) strikes remain available in the vicinity of current market prices. To this end, exchanges will be required to conduct daily market reviews. Provisions will also be made to remove from the system those strike prices that have drifted too far from current market levels and are no longer being utilized.

However, SEBI has clarified that this entire process must be designed in a manner that does not impose any undue technical strain on the systems of broking firms. This is because strike intervals have a direct impact on brokers' trading platforms. Particular care will be taken to ensure that the addition of new contracts during live market hours does not necessitate any interruptions or modifications to brokers' existing systems.

**Greater Flexibility for Exchanges**
Under this new framework, while the fundamental regulatory structure will remain uniform across the entire market, exchanges will be granted the autonomy to make certain pragmatic decisions regarding its implementation. They will be empowered to independently determine the appropriate interval between two consecutive strike prices. Furthermore, to uphold market transparency, all exchanges will be required to publish comprehensive details regarding their strike price management policies on their respective websites. These policies must also be periodically reviewed—through consultations with market participants—to facilitate necessary refinements whenever required.

It is worth noting that SEBI has sought feedback on this significant proposal from all market participants, ranging from individual investors to broking firms. Retail investors, too, are invited to submit their suggestions regarding this draft proposal by June 15, 2026.

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