Newcomer frenzy in options market worrisome: NSE chief Chauhan

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₹42,977 trillion while the premium turnover is ₹ 79.24 trillion or just 0.18% of the notional turnover. Buyers of an option have to pay sellers a premium to be able to purchase or sell an underlier like Nifty or Bank Nifty, which are cash-settled contracts.

While the notional turnover of index options rose by 15% so far this fiscal year from the whole of FY23, the premium turnover is still lower by 28% from that in FY23. “Broadly speaking, we have not seen a large increase in the number of people trading derivatives.

We have seen more or less consistent numbers of participants, which is 35-40 lakh in any quarter in the last three years." He also said that while those trading options might be categorized as small investors, they might be day traders and experts and not just a lot of newcomers. “Today, we might not be able to find out the difference between who is a day trader, an expert and who is a newcomer and those are the things we should be able to put in place at some point of time to separate and differentiate in terms of statistics." His comments come against the backdrop of Sebi mandating that each contract note issued by brokers run a set of disclaimers to caution retail investors about the pitfalls of derivatives trading, one such being that nine out of ten traders in options lose money.

On the listing of NSE , Chauhan said the exchange was awaiting Sebi approval for the same which it had sought months ago. As a systemically important market infrastructure institution, exchanges wanting to apply for a listing have to first seek Sebi permission before filing their papers with it.

“In a way, once Sebi tells us when they are comfortable, that is the time we will apply. We have not heard from them over the last six