Sebi looking at ways to grow F&O system for capital formation: Sebi WTM Ananth Narayan

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Subscribe to enjoy similar stories. India's capital markets ecosystem has seen significant growth, but the challenges of preserving trust and ensuring effective regulation are ever-present, said Ananth Narayan G., whole-time member (WTM) of the Securities and Exchange Board of India (Sebi). At the 17th Mint BFSI Summit & Awards, Narayan outlined the regulator's response to the frenzy in futures and options, by implementing targeted measures to curb egregious overtrading, particularly around expiry days.

These steps, introduced in October 2024, aimed to address specific risks without burdening the entire F&O market with overly broad restrictions, Narayan said. However, the regulator was also looking at ways to grow the F&O ecosystem for capital formation, he added. "Even as we judge the impact of these steps over the next few months, we are now looking at ways to grow the F&O ecosystem so that it contributes to price discovery, market depth, risk management, and ultimately, to capital formation," he said, adding the regulator was looking to improve the risk metrics in F&O.

Narayan also highlighted the remarkable rise in domestic capital inflows. From FY22 to FY24, inflows into equity-oriented mutual funds nearly doubled compared to the previous five years. Between FY15 and FY20, annual inflows into these funds averaged ₹1.4 trillion; however, since covid-19, it has shot up to ₹3.2 trillion annually from FY22 to FY24.