New Delhi: New measures by the Securities and Exchange Board of India (SEBI) to curb derivatives trading could halve volumes in the futures and options (F&O) segment, according to a media report.
A media report citing sources said volumes could fall by up to 50 percent after new measures come into effect. They expect 50 to 60 percent of traders to exit the F&O segment due to larger contract sizes.
Sources further said, “If there is no change in derivatives market volume after implementation of the new rules, then SEBI may take further action.”
“Due to SEBI’s action, the average futures and options trade size may increase to Rs 20,000 in FY2025, which is currently Rs 5,500,” the report said.
SEBI tightened F&O segment rules on Tuesday.
As per the F&O measures, the market regulator has increased the minimum contract size in index derivatives to Rs 15 lakh from the current Rs 5 lakh.
The market regulator has also reduced the weekly index expiration count to one per exchange. This means that exchanges can only offer one expiration in a week on a benchmark index. The market regulator has taken this action due to the huge losses suffered by retail investors in the F&O segment.
Recently, the market regulator published a study. It was reported that in the last three years, 1.10 million traders in the F&O segment have suffered a combined loss of Rs 1.81 lakh crore. Of them, only seven percent of traders have managed to make profits.
The new rules for derivative contracts will come into effect from November 20.
To curb speculative trading, the government also increased the securities transaction tax (STT) on the F&O segment from October 1.
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