SEBI Has Received 6,000 Suggestions On F&O Trading Reforms, Says Buch
This comes in response to a consultation paper from July which proposed measure to protect investors and curb frenzy and volatility in the derivatives market.
The Securities and Exchange Board of India has received approximately 6,000 suggestions from stakeholders in response to the consultation paper on Futures & Options trading, SEBI Chairperson Madhabi Puri Buch announced on Thursday.
The consultation paper, which was floated in July, proposes a series of measures aimed at enhancing investor protection and curbing frenzy and volatility in the derivatives market.
Speaking at the Global Fintech Fest 2024, Buch noted the significant response the regulator received and that advanced technology has helped process this large volume of feedback efficiently.
She also said that SEBI is currently developing several AI-powered technologies to improve market surveillance and streamline processes.
The proposed measures outlined in SEBI’s consultation paper include increasing the minimum contract size, mandating the upfront collection of option premiums, implementing intra-day monitoring of position limits, rationalising strike prices, removing calendar spread benefits on expiry day, and increasing margins near contract expiry.
Earlier this month, SEBI Whole-Time Member Ananth Narayan G said that the primary goal of these proposals is to curb the "expiry day frenzy" often seen in options trading, clarifying that there is no intention to ban derivatives trading. The proposals are intended to bring more stability to the market by addressing hyperactive trading behaviours, particularly on expiry days, he said.
The capital markets regulators research has shown that retail traders lose money in nine out of ten trades in the F&O segment. SEBI Chief Buch has previously pointed out that households are losing up to Rs 60,000 crore annually in the F&O segment, and acknowledged the need for stricter regulations.
The government has also taken steps to address the rising interest in derivatives trading. In the Union Budget of July, the securities transaction tax on futures and options trades was increased, effective Oct. 1. This move aligns with the recommendations of the Economic Survey, which flagged concerns over the speculative nature of F&O trading and its potential negative impact on a developing economy.
(With text inputs from PTI.)
