SEBI Aims to Curb Expiry Day Frenzy in Derivative Trades

SEBI Whole Time Member Ananth Narayan G aims to curb the 'expiry day frenzy' in options trading through seven proposals. He clarifies that SEBI does not intend to ban derivatives but to mitigate systemic risks. The regulator highlights concerns over significant trading losses and the imbalance between the demand and supply of securities.

In a bid to curb the 'expiry day frenzy' in options trading, SEBI Whole Time Member Ananth Narayan G emphasized the primary intent of the capital markets regulator during a FICCI event on Friday. SEBI recently released seven proposals aimed at regulating derivative trades, addressing critiques while clarifying that there is no intent to ban derivatives outright.

Addressing concerns, Narayan highlighted the detrimental impacts of frenzied trading close to expiry, likening it to a slot machine in a casino, and pointed to significant trading losses cited by NSE data. He also called for the industry to balance the demand and supply of securities, ensuring sustainable capital formation.

Narayan warned of potential systemic risks from such hyperactivity, especially if a global market-moving event were to occur minutes before expiry. SEBI will continue to monitor F&O market activities and adopt necessary steps to maintain market stability.

(With inputs from agencies.)