Latest news with #Narayan
Hans India
3 days ago
- Business
- Hans India
SEBI set to deepen equity mkt; derivatives a cause of concern
Kolkata: Sebion Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. 'Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences,' said Sebi Whole-Time Member Ananth Narayan. He was addressing the 11th Capital Markets Conclave organised by the CII. 'I would strongly endorse the view that, towards this end, we must look for ways to further deepen our cash equities markets, even as we look to improve the quality of our derivatives market by extending the tenure and maturity of the products and solutions on offer. We need constructive engagement from all stakeholders to achieve this,' he said. Citing the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 - collectively losing over Rs 1 lakh crore - funds that could otherwise contribute to responsible investing and capital formation. He highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. 'Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility,' Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the Sebi official questioned the sustainability of this trend. 'Is all this at all sustainable?' he asked. Sebihas already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. 'We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products,' Narayan said, urging industry collaboration. Responding to a question, he underscored the advantages of listing, particularly in the current environment where valuations are 'very, very attractive. Going public can unlock substantial value and enable companies to raise capital in a 'very meaningful manner,' acting as a 'force multiplier' for achieving scale and growth.
Economic Times
3 days ago
- Business
- Economic Times
Sebi to look into ways to improve F&O market: Official
Mumbai: A senior Sebi official on Thursday raised concerns over huge volumes in short-term derivatives contracts and said the regulator would considered new measures to improve the quality of the future and options market. ADVERTISEMENT "Unlike longer term derivatives, short-term derivative products such as expiry day trading in index options may detract from capital formation," Sebi whole-time member Ananth Narayan at a CII event in Kolkata. "Even today, very short-term derivatives dominate our equity derivative volumes. Research has suggested that expiry day option trading increases market volatility and could lead to noise trading that may potentially undermine confidence in price formation," he said. A Sebi research shows that 91% of individual traders incurred net losses trading in F&O in FY25, with their aggregate losses crossing ₹1 lakh crore. "As many experts have pointed out, our Indian derivative market ecosystem is quite unique, in that on expiry days, comparable turnover in index options are often 350 times or more the turnover in the underlying cash market-an imbalance that is obviously unhealthy, with several potential adverse consequences," Narayan said. He added that, the regulator recognises the potential concerns of market infrastructure institutions, brokers, and other intermediaries, whose revenues may depend heavily on these short-term derivative volumes. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
3 days ago
- Business
- Time of India
Sebi to look into ways to improve F&O market: Official
Mumbai: A senior Sebi official on Thursday raised concerns over huge volumes in short-term derivatives contracts and said the regulator would considered new measures to improve the quality of the future and options market. "Unlike longer term derivatives, short-term derivative products such as expiry day trading in index options may detract from capital formation ," Sebi whole-time member Ananth Narayan at a CII event in Kolkata. "Even today, very short-term derivatives dominate our equity derivative volumes. Explore courses from Top Institutes in Select a Course Category healthcare Finance Product Management Management Data Science Cybersecurity Healthcare Project Management Technology others Leadership Data Science MBA CXO Others Artificial Intelligence Degree Design Thinking PGDM MCA Data Analytics Public Policy Operations Management Digital Marketing Skills you'll gain: Duration: 11 Months IIM Lucknow CERT-IIML Healthcare Management India Starts on undefined Get Details Research has suggested that expiry day option trading increases market volatility and could lead to noise trading that may potentially undermine confidence in price formation," he said. A Sebi research shows that 91% of individual traders incurred net losses trading in F&O in FY25, with their aggregate losses crossing ₹1 lakh crore. "As many experts have pointed out, our Indian derivative market ecosystem is quite unique, in that on expiry days, comparable turnover in index options are often 350 times or more the turnover in the underlying cash market-an imbalance that is obviously unhealthy, with several potential adverse consequences," Narayan said. He added that, the regulator recognises the potential concerns of market infrastructure institutions, brokers, and other intermediaries, whose revenues may depend heavily on these short-term derivative volumes. Live Events
Time of India
3 days ago
- Business
- Time of India
Long-term F&O contracts can reduce volatility: Sebi official
File photo KOLKATA/MUMBAI: To improve the quality of India's derivatives market, the tenure and maturity of futures & options (F&O) contracts should be extended, a top Sebi official said on Thursday. Sebi whole-time member Ananth Narayan said that very short-term derivatives products currently dominate domestic equity derivative volumes — an 'unhealthy' trend that warrants reconsideration. Currently, Indian exchanges offer F&O products with a maximum maturity of three months. In contrast, several global markets provide F&O contracts with maturities of up to one year. While data show that the Indian market is among global leaders in F&O trading volumes, regulators and govt remain concerned that household savings are being channelised into speculative trading, rather than toward capital formation. Savings flow into speculative trades 'There is no question that derivatives and indeed, speculation are vital for price discovery, hedging, and ensuring market depth. But certain trends in our equity derivatives ecosystem have warranted a closer look for a while now,' he said Narayan, while addressing industry body CII's seminar in Kolkata. 'Research has suggested that expiry day option trading increases market volatility and could lead to noise trading that may potentially undermine confidence in price formation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like AirSense 11 – Smart tech for deep sleep ResMed Buy Now Undo Unlike longer term derivatives, short-term derivative products such as expiry day trading in index options may detract from capital formation.' The whole-time member at the markets regulator said that many experts have pointed out the Indian F&O market's unusual structure: On expiry days, index options turnover is often 350 times or more the turnover in the underlying cash market — 'an imbalance that is obviously unhealthy, with several potential adverse consequences'. A recent Sebi study showed that in FY25, nine out of 10 individual traders in the F&O segment incurred net losses. Their aggregate losses surpassed Rs 1 lakh crore during the year, a 41% increase over FY24. 'This is a large sum of money that could have otherwise gone towards responsible investing and capital formation,' he said. In response to these concerns, Sebi has recently amended F&O trading regulations, primarily to discourage short-term trading, including weekly options contracts. Initial data suggest a moderation in retail trading behaviour. He acknowledged that stock exchanges, clearing corporations, depositories, brokers, and other intermediaries worry that the regulator's move to discourage short-term trading could impact their revenues. 'But we must ask ourselves collectively — is all these at all sustainable?' Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Economic Times
3 days ago
- Business
- Economic Times
SEBI aims to deepen equity market, flags concerns over derivatives frenzy
SEBI on Thursday expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India's capital markets, while contemplating steps to extend the tenure and maturity of these products. ADVERTISEMENT "Very short-term derivatives continue to dominate equity derivative volumes, especially expiry-day index options. This is an imbalance that is obviously unhealthy and may have potential for adverse consequences," said SEBI Whole-Time Member Ananth Narayan. He was addressing the 11th Capital Markets Conclave organised by the CII. "I would strongly endorse the view that, towards this end, we must look for ways to further deepen our cash equities markets, even as we look to improve the quality of our derivatives market by extending the tenure and maturity of the products and solutions on offer. We need constructive engagement from all stakeholders to achieve this," he the market regulator's own research, Narayan pointed out that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25 - collectively losing over Rs 1 lakh crore - funds that could otherwise contribute to responsible investing and capital highlighted that the Indian derivatives market is unique, with expiry-day index option turnover often exceeding the cash market by as much as 350 times. ADVERTISEMENT "Unlike longer-term derivatives, these short-term products contribute little to capital formation and may actually add to market volatility," Narayan said. While acknowledging that exchanges, brokers, and other intermediaries have significant revenue dependence on such trading volumes, the SEBI official questioned the sustainability of this trend. ADVERTISEMENT "Is all this at all sustainable?" he has already introduced regulatory measures in October 2024 and May 2025 aimed at curbing excesses in this space, which Narayan said are showing some early signs of moderation. However, he emphasised the need for continuous engagement with stakeholders to ensure that both capital formation and market health are protected. ADVERTISEMENT "We must look for ways to deepen our cash equities markets while improving the quality of derivatives through longer-tenure products," Narayan said, urging industry to a question, he underscored the advantages of listing, particularly in the current environment where valuations are "very, very attractive. ADVERTISEMENT Going public can unlock substantial value and enable companies to raise capital in a "very meaningful manner," acting as a "force multiplier" for achieving scale and is working to boost participation and innovation across asset classes by enhancing transparency in corporate bonds, InvITs, REITs, municipal bonds, and expanding commodity has urged all stakeholders to support these underscored that preserving trust is the key ingredient for healthy capital markets."Our funds ecosystem has grown significantly with substantial growth in both issuances and investments. Something good is underway around capital formation," he he warned that unchecked speculation, governance failures, technology lapses, market manipulation, or flawed market design (Type I errors) could destroy investor trust and "kill the goose that is laying golden the same time, he cautioned against over-regulation (Type II errors) that might stifle legitimate business or capital formation."We in SEBI look at both risks very closely and undertake extensive consultations to minimise both together," he urged exchanges, clearing corporations, and depositories to maintain strong operational resilience and risk management while balancing commercial interests with public also called upon intermediaries and industry players to act as trusted advisors."When you see something wrong, please say something. And when you seek regulatory relief, please engage with us openly on how risks of potential Type I errors will be mitigated," he said. Narayan also emphasised that compliance with disclosure and governance standards associated with being a listed entity enhances long-term sustainability, likening transparency to "sunlight" being the "best disinfectant. He expressed a personal hope to see more micro, small, and medium enterprises (MSMEs) list and grow into large national champions, though he reiterated that the choice ultimately rests with promoters. (You can now subscribe to our ETMarkets WhatsApp channel)
