Latest news with #11thCapitalMarketsConclave
Hans India
3 days ago
- Business
- Hans India
SEBI set to deepen equity mkt; derivatives a cause of concern
Kolkata: Sebion Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. 'Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences,' said Sebi Whole-Time Member Ananth Narayan. He was addressing the 11th Capital Markets Conclave organised by the CII. 'I would strongly endorse the view that, towards this end, we must look for 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. We need constructive engagement from all stakeholders to achieve this,' he said. Citing the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 - collectively losing over Rs 1 lakh crore - funds that could otherwise contribute to responsible investing and capital formation. He highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. 'Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility,' Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the Sebi official questioned the sustainability of this trend. 'Is all this at all sustainable?' he asked. Sebihas already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. 'We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products,' Narayan said, urging industry collaboration. Responding to a question, he underscored the advantages of listing, particularly in the current environment where valuations are 'very, very attractive. Going public can unlock substantial value and enable companies to raise capital in a 'very meaningful manner,' acting as a 'force multiplier' for achieving scale and growth.
Economic Times
3 days ago
- Business
- Economic Times
SEBI aims to deepen equity market, flags concerns over derivatives frenzy
SEBI on Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. ADVERTISEMENT "Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences," said SEBI Whole-Time Member Ananth Narayan. He was addressing the 11th Capital Markets Conclave organised by the CII. "I would strongly endorse the view that, towards this end, we must look for 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. We need constructive engagement from all stakeholders to achieve this," he the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 - collectively losing over Rs 1 lakh crore - funds that could otherwise contribute to responsible investing and capital highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. ADVERTISEMENT "Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility," Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the SEBI official questioned the sustainability of this trend. ADVERTISEMENT "Is all this at all sustainable?" he has already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. ADVERTISEMENT "We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products," Narayan said, urging industry to a question, he underscored the advantages of listing, particularly in the current environment where valuations are "very, very attractive. ADVERTISEMENT Going public can unlock substantial value and enable companies to raise capital in a "very meaningful manner," acting as a "force multiplier" for achieving scale and is working to boost participation and innovation across asset classes by enhancing transparency in corporate bonds, InvITs, REITs, municipal bonds, and expanding commodity has urged all stakeholders to support these underscored that preserving trust is the key ingredient for healthy capital markets."Our funds ecosystem has grown significantly with substantial growth in both issuances and investments. Something good is underway around capital formation," he he warned that unchecked speculation, governance failures, technology lapses, market manipulation, or flawed market design (Type I errors) could destroy investor trust and "kill the goose that is laying golden the same time, he cautioned against over-regulation (Type II errors) that might stifle legitimate business or capital formation."We in SEBI look at both risks very closely and undertake extensive consultations to minimise both together," he urged exchanges, clearing corporations, and depositories to maintain strong operational resilience and risk management while balancing commercial interests with public also called upon intermediaries and industry players to act as trusted advisors."When you see something wrong, please say something. And when you seek regulatory relief, please engage with us openly on how risks of potential Type I errors will be mitigated," he said. Narayan also emphasised that compliance with disclosure and governance standards associated with being a listed entity enhances long-term sustainability, likening transparency to "sunlight" being the "best disinfectant. He expressed a personal hope to see more micro, small, and medium enterprises (MSMEs) list and grow into large national champions, though he reiterated that the choice ultimately rests with promoters. (You can now subscribe to our ETMarkets WhatsApp channel)
The Print
3 days ago
- Business
- The Print
SEBI aims to deepen equity market, flags concerns over derivatives frenzy
He was addressing the 11th Capital Markets Conclave organised by the CII. 'Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences,' said SEBI Whole-Time Member Ananth Narayan. Kolkata, Jul 17 (PTI) SEBI on Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. 'I would strongly endorse the view that, towards this end, we must look for 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. We need constructive engagement from all stakeholders to achieve this,' he said. Citing the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 – collectively losing over Rs 1 lakh crore – funds that could otherwise contribute to responsible investing and capital formation. He highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. 'Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility,' Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the SEBI official questioned the sustainability of this trend. 'Is all this at all sustainable?' he asked. SEBI has already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. 'We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products,' Narayan said, urging industry collaboration. Responding to a question, he underscored the advantages of listing, particularly in the current environment where valuations are 'very, very attractive. Going public can unlock substantial value and enable companies to raise capital in a 'very meaningful manner,' acting as a 'force multiplier' for achieving scale and growth. SEBI is working to boost participation and innovation across asset classes by enhancing transparency in corporate bonds, InvITs, REITs, municipal bonds, and expanding commodity derivatives. It has urged all stakeholders to support these efforts. Narayan underscored that preserving trust is the key ingredient for healthy capital markets. 'Our funds ecosystem has grown significantly with substantial growth in both issuances and investments. Something good is underway around capital formation,' he noted. However, he warned that unchecked speculation, governance failures, technology lapses, market manipulation, or flawed market design (Type I errors) could destroy investor trust and 'kill the goose that is laying golden eggs. At the same time, he cautioned against over-regulation (Type II errors) that might stifle legitimate business or capital formation. 'We in SEBI look at both risks very closely and undertake extensive consultations to minimise both together,' he assured. Narayan urged exchanges, clearing corporations, and depositories to maintain strong operational resilience and risk management while balancing commercial interests with public trust. He also called upon intermediaries and industry players to act as trusted advisors. 'When you see something wrong, please say something. And when you seek regulatory relief, please engage with us openly on how risks of potential Type I errors will be mitigated,' he said. Narayan also emphasised that compliance with disclosure and governance standards associated with being a listed entity enhances long-term sustainability, likening transparency to 'sunlight' being the 'best disinfectant. He expressed a personal hope to see more micro, small, and medium enterprises (MSMEs) list and grow into large national champions, though he reiterated that the choice ultimately rests with promoters. PTI BSM NN This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Time of India
3 days ago
- Business
- Time of India
SEBI aims to deepen equity market, flags concerns over derivatives frenzy
SEBI on Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading , cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. "Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences," said SEBI Whole-Time Member Ananth Narayan. 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"I would strongly endorse the view that, towards this end, we must look for 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. We need constructive engagement from all stakeholders to achieve this," he said. Citing the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 - collectively losing over Rs 1 lakh crore - funds that could otherwise contribute to responsible investing and capital formation. Live Events He highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. "Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility," Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the SEBI official questioned the sustainability of this trend. "Is all this at all sustainable?" he asked. SEBI has already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. "We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products," Narayan said, urging industry collaboration. Responding to a question, he underscored the advantages of listing, particularly in the current environment where valuations are "very, very attractive. Going public can unlock substantial value and enable companies to raise capital in a "very meaningful manner," acting as a "force multiplier" for achieving scale and growth. SEBI is working to boost participation and innovation across asset classes by enhancing transparency in corporate bonds, InvITs, REITs, municipal bonds, and expanding commodity derivatives. It has urged all stakeholders to support these efforts. Narayan underscored that preserving trust is the key ingredient for healthy capital markets. "Our funds ecosystem has grown significantly with substantial growth in both issuances and investments. Something good is underway around capital formation," he noted. However, he warned that unchecked speculation, governance failures, technology lapses, market manipulation, or flawed market design (Type I errors) could destroy investor trust and "kill the goose that is laying golden eggs. At the same time, he cautioned against over-regulation (Type II errors) that might stifle legitimate business or capital formation. "We in SEBI look at both risks very closely and undertake extensive consultations to minimise both together," he assured. Narayan urged exchanges, clearing corporations, and depositories to maintain strong operational resilience and risk management while balancing commercial interests with public trust. He also called upon intermediaries and industry players to act as trusted advisors. "When you see something wrong, please say something. And when you seek regulatory relief, please engage with us openly on how risks of potential Type I errors will be mitigated," he said. Narayan also emphasised that compliance with disclosure and governance standards associated with being a listed entity enhances long-term sustainability, likening transparency to "sunlight" being the "best disinfectant. He expressed a personal hope to see more micro, small, and medium enterprises (MSMEs) list and grow into large national champions, though he reiterated that the choice ultimately rests with promoters. ETMarkets WhatsApp channel )
Mint
3 days ago
- Business
- Mint
Sebi flags expiry-day derivatives surge as retail losses top ₹1 trillion
Mumbai: A senior official at India's markets regulator has raised red flags over the surge in short-term equity derivatives trading, particularly expiry-day index options, warning that the current structure may be unsustainable and detrimental to long-term capital formation. The Securities and Exchange Board of India (Sebi) has been closely tracking the exponential rise in such activity, which has been accompanied by significant losses for retail investors. At the 11th Capital Markets Conclave of Confederation of Indian Industry (CII) in Kolkata on Thursday, Sebi's whole-time member Ananth Narayan G said the regulator is focused on balancing innovation with investor protection. 'There is no question that derivatives and indeed, speculation are vital for price discovery, hedging, and ensuring market depth. But certain trends in our equity derivatives ecosystem have warranted a closer look for a while now,' Narayan told the gathering. He flagged a stark imbalance in market activity: 'On expiry days, comparable turnover in index options is often 350 times or more the turnover in the underlying cash market—an imbalance that is obviously unhealthy, with several potential adverse consequences.' Narayan cited Sebi's latest research report, released on 7 July, which found that 91% of individual traders incurred net losses trading in futures and options (F&O) in FY25, with total losses exceeding ₹ 1 trillion. 'This is a large sum of money that could have otherwise gone towards responsible investing and capital formation,' he said. The regulatory focus on expiry-day option trading comes in the wake of Sebi's recent action against US-based quant trading firm Jane Street. On 3 July, Sebi barred the firm from accessing the securities market for deploying what it described as manipulative trading strategies around index options expiry, directing it to deposit ₹ 4,800 crore—the alleged unlawful gains—into a Sebi escrow account. Jane Street has since complied with the directive, paving the way for a potential resumption of trading in India, subject to Sebi's review. The regulator is currently assessing the firm's request. While Narayan did not refer to Jane Street by name, his remarks appeared to echo broader regulatory concerns: 'noise trading that may potentially undermine confidence in price formation' and 'unhealthy' market structures. Narayan also drew attention to possible conflicts of interest: 'We recognize the potential concerns of market infrastructure institutions, brokers, and other intermediaries, whose revenues may depend heavily on these short-term derivative volumes. But we must ask ourselves collectively – is all this at all sustainable?' Sebi has introduced a series of regulatory measures since October 2024 aimed at tempering speculative excesses. 'We are seeing some signs of moderation of the trends noted above. However, this specialized area requires ongoing constructive debate and work,' Narayan said. That October, the regulator reduced the frequency of weekly expiries, increased contract lot sizes, scrapped calendar spread benefits on expiry day, implemented intraday position checks, mandated upfront collection of option premia, and raised extreme loss margins on expiry days. In May 2025, Sebi followed up with measures to improve risk metrics and disclosures in F&O, reduce instances of spurious F&O ban periods in single stocks, and strengthen oversight of index options to mitigate potential concentration or manipulation risks. Fresh data from Sebi's 7 July study, based on individual trading activity between December 2024 and May 2025, shows early signs of cooling. In FY25, turnover by individual investors in index options declined 9% year-on-year in premium terms and 29% in notional terms. The number of unique retail participants in the derivatives market also fell 20% from last year's record highs, suggesting a slowdown in the speculative frenzy that had drawn millions of new entrants. Looking ahead, Narayan called for deeper market engagement: '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.'
