Sebi looks to extend tenure of derivatives contracts, says official

India is looking to improve the quality of the derivatives market by extending the tenure and maturity of such contracts, an official at the markets regulator said in a speech on Thursday.

"We must look for further ways to further deepen our cash equities markets, even as we look to improve the quality of our derivatives market by extending the tenure and maturity of the products and solutions on offer," said Ananth Narayan, a whole-time member at the Securities and Exchange Board of India (Sebi).

Narayan did not provide details on the possible extension of the tenure of these contracts.

The surge in derivatives trading, which has also been driven by retail investors, has prompted the Sebi to limit the number of contract expiries and increase lot sizes to make such trades more expensive.

Earlier this month, Sebi barred U.S. securities trading company Jane Street from the local market until further orders, and seized $567 million of its funds, saying an investigation found it manipulated stock indexes through positions taken in derivatives.

"Short-term contracts dominate our equity derivatives volumes," Narayan said.

He said that these contracts detract from capital formation.

Sebi's research shows that 91 per cent of individual traders incurred net losses trading in futures and options in fiscal 2025.

Highlighting the imbalance between cash markets and derivatives, Narayan said that on expiry days, comparable turnover in index options can exceed the cash market by over 350 times.