Sebi proposals seek orderly conduct in F&O market amid volatility

Even as its proposed measures and those announced last year have helped, Sebi will need to be fleet-footed in its regulation and supervision of this market

Indian equity markets witnessed an unprecedented surge in derivatives trading over the past five years, becoming the world’s largest derivatives market with a notional turnover of $6.4 trillion a day and annual option premiums of $2.2 trillion in 2024. The proportion of derivatives to cash market volumes in India is also the highest globally.

 

Market regulator Securities and Exchange Board of India (Sebi) in July 2024 proposed the first set of measures to contain this unfettered growth of derivatives, particularly among retail participants who were incurring high losses (90 per cent, according to a Sebi study). These measures included: (1)