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<h1>Physical settlement requirement mandates phased migration of cash-settled stock derivatives to delivery-based settlement under enhanced eligibility and implementation obligations.</h1> Mandatory physical settlement is prescribed for all stock derivatives, replacing cash settlement; affected stocks are ranked by average daily market capitalization for December 2018 and migrated in phased tranches during 2019. New derivatives meeting enhanced eligibility must be physically settled. Stock Exchanges must amend rules, implement systems, notify market participants, disseminate the circular, and report implementation status monthly to SEBI. Other conditions from the April 11, 2018 circular continue to apply.