Mumbai, April 30 The Securities and Exchange Board of India (SEBI) is actively working on refining rules related to the derivatives market, with a focus on protecting retail investors while ensuring that market activity is not affected, its Chairman Tuhin Kanta Pandey said on Wednesday.
Pandey clarified that SEBI is not trying to clamp down on the futures and options market but is adopting a balanced approach.
While discussing the regulator’s recent proposals to NDTV Profit, he said the goal is to improve the market's structure and reduce unnecessary risks for small investors.
"We are continuously reviewing the market, gathering feedback, and we are ready to make adjustments where necessary," Pandey said.
The market regulator had earlier issued a consultation paper on proposed futures and options reforms, and according to Pandey, the regulator has received over 800 public comments.
These comments are now being carefully examined, and a final decision on the proposed changes will be made soon.
The SEBI Chairman said that many of the proposed measures do not require approval in a board meeting and can be implemented directly through administrative procedures.
This means the new changes, once finalised, could be rolled out quickly. One key proposal includes changing the way open interest (OI) is calculated in the equity derivatives market.
SEBI is considering shifting from the notional value method to a 'Future Equivalent' method. The aim is to avoid artificial inflation of open interest, which can push stocks into a ban period unnecessarily.
SEBI has also suggested a change in the way the market-wide position limit (MWPL) is calculated. Currently, the MWPL is set at 20 per cent of a stock’s free-float market capitalisation.
The new proposal recommends that it should be the lower of 15 per cent of free-float market cap or 60 times the average daily delivery value (ADDV) in the cash market.
This move is aimed at tightening limits on speculative trading without disrupting genuine market activity.
Last year, SEBI had also raised concerns over high trading volumes in the futures and options segment and released a report which revealed that nine out of ten retail investors were incurring losses in derivatives trading.
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