Sebi to look into ways to improve F&O market: Official
Sebi
official on Thursday raised concerns over huge volumes in
short-term derivatives
contracts and said the regulator would considered new measures to improve the quality of the future and options market.
"Unlike longer term derivatives, short-term derivative products such as
expiry day trading
in index options may detract from
capital formation
," Sebi whole-time member Ananth Narayan at a CII event in Kolkata. "Even today, very short-term derivatives dominate our equity derivative volumes.
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Research has suggested that expiry day option trading increases market volatility and could lead to noise trading that may potentially undermine confidence in price formation," he said.
A Sebi research shows that 91% of individual traders incurred net losses trading in F&O in FY25, with their aggregate losses crossing ₹1 lakh crore.
"As many experts have pointed out, our
Indian derivative market
ecosystem is quite unique, in that on expiry days, comparable turnover in index options are often 350 times or more the turnover in the underlying cash market-an imbalance that is obviously unhealthy, with several potential adverse consequences," Narayan said. He added that, the regulator recognises the potential concerns of market infrastructure institutions, brokers, and other intermediaries, whose revenues may depend heavily on these short-term derivative volumes.
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