SEBI's New Derivative Rules: Will They Stabilize or Stifle the Market?

SEBI's new rules for index derivatives may reduce volumes in Futures & Options (F&O), impacting trading operations but aim to enhance market stability and investor protection. The seven proposed measures include changes to contract sizes, option premiums, and expiration periods. Experts suggest implementing changes gradually to avoid market disruption.

SEBI's proposal to tighten rules for index derivatives could significantly reduce volumes in Futures & Options (F&O), experts indicated on Wednesday.

The new rules aim to enhance investor protection and promote market stability. SEBI's consultation paper outlines measures such as increasing contract sizes, adjusting option premiums, and limiting expiration periods.

Industry analysts are concerned about the potential impact on trading volumes, particularly in the equity derivatives segment, driven by frequent expiries. They recommend a phased implementation to maintain market vibrancy.

(With inputs from agencies.)