Description

NSE Clearing announces adjustment procedures for F&O contracts in Multi Commodity Exchange of India Limited (MCX) following face value split from Rs.10 to Rs.2 per share with adjustment factor of 5, effective January 2, 2026.

Summary

NSE Clearing Limited has issued adjustment procedures for all Futures and Options contracts in Multi Commodity Exchange of India Limited (MCX) following a face value split from Rs.10 per share to Rs.2 per share. The adjustment factor is 5, and the ex-date is January 2, 2026. All open positions existing after end of day on January 1, 2026 will be adjusted according to specified formulas for positions, prices, and market lot sizes.

Key Points

  • Adjustment Factor: 5 (reflecting the 5:1 stock split ratio)
  • Ex-Date: January 2, 2026
  • Underlying Security: Multi Commodity Exchange of India Limited (MCX)
  • Corporate Action: Face value split from Rs.10 per share to Rs.2 per share
  • Positions Affected: All open Futures and Options contracts in MCX existing after EOD on January 1, 2026
  • Reference Circulars: SEBI circular SMDRP/DC/CIR-8/01 dated June 21, 2001; NCL/CMPT/67750 dated April 29, 2025; NSE/FAOP/71966 dated December 23, 2025

Regulatory Changes

Futures Contract Adjustments:

  • Adjusted positions = Number of contracts × Adjusted market lot (per Circular 221/2025)
  • Adjusted futures price = Settlement price on January 1, 2026 ÷ 5
  • Adjusted value = Pre-adjusted long/short quantity × Pre-adjusted settlement price
  • All positions will be marked-to-market on January 1, 2026 based on daily settlement price
  • Adjusted positions carried forward at adjusted value from January 2, 2026

Options Contract Adjustments:

  • Adjusted strike price = Old strike price ÷ 5
  • Adjusted positions = Number of contracts × Adjusted market lot
  • Positions continue to exist at new adjusted strike prices
  • Adjusted market lot as per Circular 221/2025

Margin Calculations:

  • Begin of day margins on January 2, 2026 computed based on adjusted carry forward value
  • Intra-day margins computed based on relevant traded prices when span risk parameter files are generated

Compliance Requirements

For All Members:

  • Review all open F&O positions in MCX security before January 1, 2026 EOD
  • Ensure systems are updated to handle 5x adjustment factor
  • Reconcile adjusted positions after January 2, 2026
  • Update margin computation systems for adjusted contract specifications
  • Verify adjusted strike prices for options contracts
  • Confirm adjusted market lot sizes as per referenced circular

For Clearing Members:

  • Verify adjusted carry forward values for all client positions
  • Ensure accurate MTM settlement on January 1, 2026
  • Validate margin requirements post-adjustment

Important Dates

  • January 1, 2026: Last trading day before adjustment; positions marked-to-market at pre-adjusted settlement prices
  • January 2, 2026: Ex-date for corporate action; all adjustments effective; normal MTM procedures resume with adjusted specifications
  • Reference Date: Circular dated December 24, 2025 (Circular Ref. No: 169/2025, Download Ref: NCL/CMPT/71998)

Impact Assessment

Market Impact:

  • All existing F&O positions in MCX will be adjusted by factor of 5
  • Position quantities will increase 5-fold based on adjusted market lot
  • Futures prices and options strike prices will be divided by 5
  • Example: 125 long futures contracts become 625 contracts at 1/5th the price
  • No change to overall position value due to offsetting adjustments

Operational Impact:

  • Trading systems must handle new contract specifications from January 2, 2026
  • Risk management systems require recalibration for adjusted parameters
  • Client reporting systems need updates to reflect adjusted positions
  • Margin requirements recalculated based on adjusted values
  • Contract value preservation through adjusted value methodology prevents rounding-off discrepancies

Participant Impact:

  • High impact on all market participants holding MCX derivative positions
  • Requires position reconciliation and verification post-adjustment
  • Settlement value remains economically equivalent despite numerical changes
  • Critical for participants to understand adjustment mechanics to avoid confusion about position sizes

Impact Justification

Mandatory adjustment of all open F&O positions in MCX with 5x adjustment factor affects all market participants holding derivative contracts; requires immediate attention for position reconciliation and margin calculations.