Retail F&O trades still high despite Sebi curbs; fresh review likely to reassess risks

Sebi has noticed that people’ exercise in index choices inside the derivatives phase has not declined as a lot as anticipated and will take additional motion after a deeper review, sources informed information company PTI.The capital markets regulator examined exercise between December 2024 and March 2025 and located that though there was a year-on-year drop, buying and selling ranges stay considerably greater than two years in the past.In November 2024, Sebi launched restrictions within the futures and choices (F&O) market concentrating on high particular person exercise, following information that confirmed over 90 per cent of particular person merchants had been incurring losses.According to Sebi’s evaluation, the variety of people buying and selling in fairness derivatives fell 12 per cent year-on-year, however rose 77 per cent in contrast to the identical interval two years in the past (December 2022–March 2023).Index choices stay the first space of concern due to intense hypothesis, particularly on expiry days. Individual trades in index choices had been discovered to be down 5 per cent on premium phrases and 16 per cent on notional phrases year-on-year. However, in contrast to two years in the past, volumes are up 34 per cent on premium and 99 per cent on notional phrases.“Sebi will re-examine the trading activity of individuals in index options from an investor protection and systemic stability perspective,” a supply mentioned.“It has been noticed that despite the measures taken last year to contain speculative overtrading in index options, particularly on expiry day, the activity is high,” the supply added.“Sebi is going to continue monitoring the activity in index options, and, if warranted, would be examining the feasibility of any further actions in this regard,” the supply mentioned.Despite regulatory actions, India continues to lead globally in derivatives buying and selling volumes. The supply mentioned this development should be matched with stronger danger monitoring.“There is a need to match the rapid growth with commensurate improvements in risk monitoring,” the supply added.Sebi is engaged on refining the way it assesses publicity, reduces manipulation danger, and avoids unintended disruptions. The February session paper titled “Enhancing Trading Convenience and Strengthening Risk Monitoring in Equity Derivatives” emphasised that complete surveillance and enforcement ought to take priority over blanket rules.The paper proposed tighter controls on market focus risks utilizing smarter surveillance instruments, as overly inflexible rules might hamper wholesome market-making.According to the supply, public suggestions on the proposals was largely optimistic, and a few options had been integrated into the ultimate plans.Position limits for index choices have been relaxed to Rs 1,500 crore on a internet foundation and Rs 10,000 crore on a gross foundation, with no intraday cap, to assist smoother buying and selling for contributors, the supply added.