NEW DELHI: Markets regulator Sebi is a two-stage tightening of norms for the fairness futures & choices section at the same time as consultations with market contributors for the primary section are set to kick off.
Whereas F&O was meant to assist traders hedge their dangers, lately, Sebi in addition to govt officers are frightened over this section seeing giant scale hypothesis with retail traders too leaping into the ring and dropping cash.
An knowledgeable committee is carefully trying on the information. Its preliminary suggestions targeted on a seven-pronged assault to test hypothesis has been endorsed by the secondary market advisory committee, comprising specialists and key market contributors, and the regulator is predicted to subject a session paper within the subsequent few days, a supply mentioned.
The knowledgeable panel will present extra ideas within the coming weeks which may be applied later. Among the many suggestions for the preliminary spherical is a suggestion to extend the minimal worth of every F&O contracts from Rs 5 lakh to round Rs 25 lakh. There are additionally proposals for weekly expiry of contracts and better margin necessities for traders.
Though there have been ideas from market contributors for setting up product suitability norms – as is the case in some nations with standards like wealth or schooling of the investor – it could be powerful to implement in India.
Sebi’s issues over rising F&O volumes have been for the primary time flagged in a report in Jan 2023 because it emerged that particular person merchants who traded with high 10 brokers added as much as over 45 lakh in FY22, in comparison with 7 lakh in FY19. It additionally mentioned that 9 out of 10 particular person merchants within the fairness F&O section incurred losses, which on a median labored out to Rs 1.1 lakh throughout FY22. Nearly 90% of the lively merchants incurred common losses of Rs 1.25 lakh throughout this era.
Since then, the volumes have solely elevated. In Might, the mixture turnover within the fairness derivatives segments of the BSE and the NSE was Rs 9,504 lakh crore, an increase of 71% over Might 2023.
Whereas F&O was meant to assist traders hedge their dangers, lately, Sebi in addition to govt officers are frightened over this section seeing giant scale hypothesis with retail traders too leaping into the ring and dropping cash.
An knowledgeable committee is carefully trying on the information. Its preliminary suggestions targeted on a seven-pronged assault to test hypothesis has been endorsed by the secondary market advisory committee, comprising specialists and key market contributors, and the regulator is predicted to subject a session paper within the subsequent few days, a supply mentioned.
The knowledgeable panel will present extra ideas within the coming weeks which may be applied later. Among the many suggestions for the preliminary spherical is a suggestion to extend the minimal worth of every F&O contracts from Rs 5 lakh to round Rs 25 lakh. There are additionally proposals for weekly expiry of contracts and better margin necessities for traders.
Though there have been ideas from market contributors for setting up product suitability norms – as is the case in some nations with standards like wealth or schooling of the investor – it could be powerful to implement in India.
Sebi’s issues over rising F&O volumes have been for the primary time flagged in a report in Jan 2023 because it emerged that particular person merchants who traded with high 10 brokers added as much as over 45 lakh in FY22, in comparison with 7 lakh in FY19. It additionally mentioned that 9 out of 10 particular person merchants within the fairness F&O section incurred losses, which on a median labored out to Rs 1.1 lakh throughout FY22. Nearly 90% of the lively merchants incurred common losses of Rs 1.25 lakh throughout this era.
Since then, the volumes have solely elevated. In Might, the mixture turnover within the fairness derivatives segments of the BSE and the NSE was Rs 9,504 lakh crore, an increase of 71% over Might 2023.
