MUMBAI: SEBI chairperson Tuhin Kanta Pandey on Thursday said the market regulator “cannot just shut down” weekly futures and options (F&O) expiries, even as it studies ways to contain growing risks from a surge in retail participation in the derivatives market.
Speaking at a financial summit in Mumbai, Pandey said the Securities and Exchange Board of India (SEBI) is collecting and analysing data related to F&O trading before finalising any policy changes.
“This is a very sensitive subject with a lot of nuances. There has been a problem in the derivatives market, which has been highlighted by SEBI… How can we shut down the F&O weekly options market just like that?” Pandey said.
His comments come amid speculation that SEBI could scrap weekly expiries – a key driver of trading volumes – as part of its efforts to curb excessive speculation and improve the health of the cash market.
Retail surge, rising losses
Retail interest in F&O trading has soared in recent years, with individual investors now accounting for a dominant share of index options trades. SEBI’s own analysis earlier this year showed that nine out of ten retail traders lose money, with the average loss per trader touching nearly Rs1.1 lakh in FY22.
The findings prompted the regulator to look at ways to make the market safer – from tighter margin rules and improved risk disclosures to possible limits on high-frequency speculative activity linked to weekly expiries.
Gradual, data-driven reform
Pandey reiterated that any steps on derivatives will be rolled out in a phased and data-driven mannerto avoid sudden disruption. Over the past year, SEBI has already introduced measures such as:
Enhanced risk disclosures to caution traders before they enter the F&O segment; Suitability assessments for brokers to ensure investors understand potential losses; Tighter oversight of leveraged and high-turnover positions, etc.
He also underlined that the goal is to balance market vibrancy with investor protection, especially as participation spreads beyond major cities.
Next steps
A SEBI-appointed panel examining conflicts of interest within the regulator is expected to submit its report by November 10, Pandey said. Once approved, its recommendations would align SEBI’s governance framework with global standards.
For now, the regulator’s message to traders and brokers is clear: the weekly expiry may survive – but unchecked speculation will not.
