The agenda is a part of the preliminary suggestions of a committee of consultants within the area of derivatives composed of market regulators.
An knowledgeable committee is at the moment reviewing related information Futures and options (F&O) division works carefully collectively, occasions of india The report mentioned, including that the committee’s preliminary suggestions have been aimed toward curbing speculative buying and selling.
The report citing sources mentioned growing the minimal worth of every F&O contract from Rs 5 lakh to Rs 25 is likely one of the measures being thought-about by the committee.
One of many individuals mentioned: “Its preliminary suggestions concentrate on cracking down on seven points to curb hypothesis, and have been endorsed by the Secondary Market Advisory Committee composed of consultants and main market contributors. The regulator is predicted to A session paper can be launched inside days. The primary section of consultations with market contributors is about to start. Though it was initially supposed to assist buyers hedge dangers, the rising scale of F&O hypothesis has alarmed Sebi and authorities officers in January. Highlighted in a report, the report states that F&O buying and selling volumes have elevated considerably. Amongst particular person merchants within the fairness F&O area, the variety of merchants exceeded 4.5 million in FY2022, in comparison with 700,000 in FY2019. The report additionally confirmed that in 2022 9 out of ten particular person merchants suffered losses in the course of the monetary 12 months, with a mean lack of Rs 1.10 lakh and almost 90% of lively merchants misplaced a mean of Rs 1.25 lakh in the course of the interval.
Thereafter, buying and selling volumes continued to develop because the BSE and NSE fairness derivatives section recorded a complete turnover of Rs 9,504 billion in Might, up 71% from Might 2023.
Different suggestions within the first section embrace suggestions for weekly contract expirations and better margin necessities for buyers. The knowledgeable panel is predicted to make extra suggestions within the coming weeks and should implement them later.
There have been solutions to introduce product suitability norms, much like these in another nations, which set out standards resembling an investor’s wealth or training. Nevertheless, the report famous that implementing such norms in India could possibly be difficult.
ET had beforehand reported on the committee and mentioned it might meet on July 15 to debate short-term measures for the F&O sector. It additionally mentioned that the working group headed by former Reserve Financial institution of India govt director G Padmanabhan mentioned numerous suggestions, together with limiting weekly choices, growing lot measurement of F&O contracts, growing margin necessities, charging choice premium upfront from choice consumers and intraday monitoring place restrict.
Sebi Chairman Madhabi Puri Buch lately mentioned the capital markets regulator had anecdotal proof of individuals borrowing cash to make speculative bets within the derivatives area, lamenting that family financial savings have been being invested in such dangerous bets.
Regulators additionally famous that choices buying and selling quantity surges at weekly contract expirations. Presently, there may be at the very least one NSE or BSE index expiry on all 5 working days of the week.
(Disclaimer: The recommendation, solutions, views and opinions given by consultants are private and don’t symbolize the views of The Financial Occasions)
