Sebi, the regulator for stock markets in India, is not planning to put any more limits on trading in derivatives, says Ananth Narayan, a top official at Sebi. An expert group, led by former RBI director G Padmanabhan, is working on improving the trading system and making it easier and safer for people to trade.
Earlier, in November, Sebi made some rules to reduce risky trading in the futures and options market after finding that 93% of retail investors lost money over the last three years. Narayan stated that Sebi supports derivatives as they help find fair prices and grow the market. Changes will only happen after talking to others in the market.
There are ongoing discussions about better ways to measure risk in derivatives. Narayan emphasized that both cash and derivatives markets should have good volume and depth so they can work well together. He criticized the current method of measuring open interest, saying it gives a misleading picture and needs change.
Sebi is also thinking about linking trading limits to how many shares are delivered and possibly changing rules from the time of COVID to manage market ups and downs. They want to ensure that stock indices do not have too much focus on a few big stocks, as this could make the market less trustworthy. Narayan mentioned that he sees concerns on social media about possible market manipulation, especially in index trading, and that Sebi is looking into these issues. Overall, the goal is to make trading easier and safer while also improving how risks are measured
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