For a secure future, Sebi opts for tighter F&O rules
equity derivatives — and on fewer weekly contract choices than they now have — after the markets regulator introduced a raft of measures Tuesday to curb retail participation in a segment where at least nine out of ten participants have consistently lost money over the past three years.
The Securities and Exchange Board of India (Sebi) Tuesday increased the minimum contract size in index derivatives to ₹15 lakh from the current ₹5 lakh, making options trading costlier. At the same time, it reduced weekly index product offerings to just one per exchange, seeking to curb frenzied speculation among retail traders.
«Given the inherent leverage and higher risk in derivatives, this recalibration in minimum contract size, in tune with the growth of the market, would ensure that an inbuilt suitability and appropriateness criteria for participants is maintained as intended,» Sebi said in a circular.
'Will Impact Exchanges' Revenues'
A study by the regulator had shown that 11 million traders in the derivatives segment made a combined loss of Rs 1.81 lakh crore over the past three years, with just over 7% of the traders in the segment making money. Several market commentators have expressed concerns over the retail frenzy, arguing in favour of measures that would curb speculative trading in the segment.
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