The stock exchange said in a circular on April 11 that the National Stock Exchange would re-introduce the ‘do not exercise’ instruction in stock options from April 28.
“It may be noted that the facility of specifying the ‘do not exercise’ instruction on the expiry day will be reintroduced in stock option contracts with effect from April 28, 2022. The mechanism for introduction (file format and timeline) remains the same as before. shall be specified in the NCL circular reference NSCCL/CMPT/35635 dated August 22, 2017. It is reiterated that the introduction of DNE is only for Stock Option contracts,” read the NSE circular.
Earlier this year, Zerodha co-founder Nitin Kamato Expressed concern over mandatory physical delivery for stock options and the removal of the “do not exercise” (DNE) feature for options (specifically buy options).
Stock futures and options in India were cash settlement till October 2019, and since then, mandatory physical delivery on expiry was introduced.
The DNE facility is expected to hedge the risks surrounding physical settlement and allow brokers to cease exercising options contracts on behalf of clients.
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