Latest news with #CII
Business Standard
a day ago
- Business
- Business Standard
SEBI calls for more deepening of cash equities markets, highlights dominance of very short-term contracts in derivatives market
Securities Exchange Board of India or SEBI, the domestic capital markets regulator has called for a constructive engagement from all stakeholders on the derivatives market amid high investor losses. Speaking at an event organised by the CII in Calcutta, Sebi whole-time member Ananth Narayan G said that 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 as very short - term derivatives dominate our equity derivative volumes. 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. Unlike longer term derivatives, short - term derivative products such as expiry day trading in index options may detract from capital formation. He noted that 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. He opined that 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.
Hans India
2 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
2 days ago
- Business
- Economic Times
Sebi to look into ways to improve F&O market: Official
Mumbai: A senior 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. ADVERTISEMENT "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. 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. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
2 days ago
- Business
- Time of India
Sebi to look into ways to improve F&O market: Official
Mumbai: A senior 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. Explore courses from Top Institutes in Select a Course Category healthcare Finance Product Management Management Data Science Cybersecurity Healthcare Project Management Technology others Leadership Data Science MBA CXO Others Artificial Intelligence Degree Design Thinking PGDM MCA Data Analytics Public Policy Operations Management Digital Marketing Skills you'll gain: Duration: 11 Months IIM Lucknow CERT-IIML Healthcare Management India Starts on undefined Get Details 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. Live Events
Time of India
2 days ago
- Business
- Time of India
Long-term F&O contracts can reduce volatility: Sebi official
File photo KOLKATA/MUMBAI: To improve the quality of India's derivatives market, the tenure and maturity of futures & options (F&O) contracts should be extended, a top Sebi official said on Thursday. Sebi whole-time member Ananth Narayan said that very short-term derivatives products currently dominate domestic equity derivative volumes — an 'unhealthy' trend that warrants reconsideration. Currently, Indian exchanges offer F&O products with a maximum maturity of three months. In contrast, several global markets provide F&O contracts with maturities of up to one year. While data show that the Indian market is among global leaders in F&O trading volumes, regulators and govt remain concerned that household savings are being channelised into speculative trading, rather than toward capital formation. Savings flow into speculative trades '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,' he said Narayan, while addressing industry body CII's seminar in Kolkata. '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. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like AirSense 11 – Smart tech for deep sleep ResMed Buy Now Undo Unlike longer term derivatives, short-term derivative products such as expiry day trading in index options may detract from capital formation.' The whole-time member at the markets regulator said that many experts have pointed out the Indian F&O market's unusual structure: On expiry days, index options turnover is often 350 times or more the turnover in the underlying cash market — 'an imbalance that is obviously unhealthy, with several potential adverse consequences'. A recent Sebi study showed that in FY25, nine out of 10 individual traders in the F&O segment incurred net losses. Their aggregate losses surpassed Rs 1 lakh crore during the year, a 41% increase over FY24. 'This is a large sum of money that could have otherwise gone towards responsible investing and capital formation,' he said. In response to these concerns, Sebi has recently amended F&O trading regulations, primarily to discourage short-term trading, including weekly options contracts. Initial data suggest a moderation in retail trading behaviour. He acknowledged that stock exchanges, clearing corporations, depositories, brokers, and other intermediaries worry that the regulator's move to discourage short-term trading could impact their revenues. 'But we must ask ourselves collectively — is all these at all sustainable?' Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
