SEBI Sounds Alarm on Derivatives Trading: New Measures Aim to Curb Retail Losses

The Securities and Exchange Board of India (SEBI) is increasing vigilance over the futures and options (F&O) segments with concerns growing over retail investor losses and short-term speculative trade. Sources familiar with the development indicated that up to 90% of retail option traders continue to incur losses, especially on weekly expiry dates, prompting the regulator to consider more structural changes.

 

SEBI is reported to be working on a multi-faceted strategy for limiting excessive risk-taking, promoting longer-term contracts, and encouraging genuine hedging rather than speculative bets. SEBI has already rolled out a delta-based open interest indicator to more closely reflect genuine economic exposure in lieu of the traditional notional method.

 

Key Issues

Regulatory Interventions Ongoing

"There is a need to systematically push the market to longer-dated contracts and encourage long-term investing," a SEBI official stated.

 

Sources: MSN, SEBI Press Release, Business Standard, India Today, Financial Express –