"It's a logical next step," said Justin Kennedy, managing director in Asia-Pacific equity derivatives at Citigroup in Hong Kong. "This gives investors an effective means to trade single-stock optionality onshore." In addition to direct trading by qualified institutional investors, international houses offer such derivative positions to offshore accounts via market access participatory notes, which have become a massive business in the last few years.
"We've watched index volumes increase substantially and thought it was time to increase the limits on single stock contracts," said N. Parakh, chief general manager in the derivatives department and author of the circular at SEBI in Mumbai. "This should allow for the development of a meaningful single-stock options market," added Kennedy.