Sebi evaluates measures to balance derivatives trading, including easing margins on long-term contracts, amid ongoing efforts to deepen India’s capital markets and curb short-term speculation.
India’s markets regulator is weighing changes to the derivatives segment aimed at making it more balanced without jolting a market that has become heavily skewed towards short-dated options trading, according to Securities and Exchange Board of India chair Tuhin Kanta Pandey.
Pandey said on Wednesday that the regulator does not want to take steps that would “unnecessarily disrupt” the futures and options market, but is instead looking for measures that could help in a “positive sense”. He said the main concern remains the concentration of activity in short-term index options, particularly around expiry, while losses for investors in the segment have stayed elevated despite a series of curbs introduced since 2024.
The Sebi chief said derivatives play a crucial role in linking India’s cash and futures markets, but argued that the ecosystem should not be reduced to a single product category. He said the regulator needed to develop longer-term derivatives, futures and longer-dated stock options, and added that Sebi was open to reviewing margins and other requirements tied to such contracts. Economic Times reported that one option under consideration is easing margin requirements for longer-dated derivatives to support market depth while discouraging excessive short-term speculation.
In a separate speech at the SBI Banking and Economics Conclave, Pandey framed the debate as part of a broader shift in how India finances growth. He said banks and capital markets are complementary rather than competing channels, arguing that both need to remain strong as the economy becomes more sophisticated. He also said policymakers will need to consider simplifying the taxation of debt instruments, given their importance to investors.
Pandey pointed to a series of steps already taken to deepen India’s corporate bond market. He said outstanding corporate bonds now total about Rs 61 trillion, or roughly 55% of bank credit to industry and services. Sebi has lowered the threshold for use of the Electronic Book Provider platform to Rs 20 crore from Rs 50 crore, shortened the listing timetable for public debt issues to T+3 working days from T+6, and cut the minimum face value for privately placed debt securities to Rs 10,000 from Rs 1 lakh. The regulator has also introduced liquidity windows for non-convertible securities and begun a pilot to tokenise corporate bonds under Demat 2.0.
On equity markets, Pandey said initial public offering and rights issue timelines have been reduced and listing rules eased for large issuers. He also said Sebi is reviewing the Accredited Investor Framework, while the regulator continues to look for ways to broaden market participation without destabilising trading conditions. Moneycontrol reported that he was not signalling any immediate new curbs on futures and options, a remark that helped calm fears of abrupt intervention.
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