SEBI Chairman Tuhin Kanta Pandey has dismissed media reports about a possible curb on weekly expiry contracts as “false and speculative.” His clarification triggered a rebound in capital market stocks, especially BSE, which fully recovered intraday losses.
The Indian equity market witnessed a swift rebound on August 6 after Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey dismissed reports of any regulatory move to curb weekly expiry options. The clarification restored investor confidence and helped capital market-linked stocks recover from sharp intraday losses.
Earlier in the day, shares of BSE had dropped to an intraday low of ₹2,282. However, following the SEBI Chairman’s public comment, the stock reversed losses and was up 1% at ₹2,403 by 12:20 PM. Other players such as Angel One, CAMS, and Motilal Oswal Financial Services also rebounded, reflecting market-wide relief.
The Nifty Capital Markets Index, which was down as much as 1.5% during early trade, returned to positive territory post clarification.
This reaction comes in the wake of speculative reports suggesting that SEBI and the Ministry of Finance were discussing structural reforms in the derivatives market, including the potential replacement of weekly expiry contracts with fortnightly or monthly expiries to address excessive speculation.
While such a change could reduce speculative volumes in index options and potentially strengthen the cash market, the report was categorically denied by the SEBI chief as “false and speculative.”
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The Indian derivatives market has grown exponentially, often witnessing index options turnover exceeding the cash market by a factor of 350 on expiry days. Recent data from SEBI’s July 7 study shows an increasing trend in retail investor participation in F&O segments over the last two years, despite a notable decline in the last fiscal year. However, the data also highlighted serious concerns:
- 91% of retail F&O traders ended in losses
- Net trader losses widened by 41% year-over-year to ₹1.05 trillion in FY25
- Smaller traders (turnover < ₹1 lakh) saw the steepest decline
In this context, SEBI’s internal assessments and recent public commentary suggest the regulator is evaluating long-term structural improvements to derivatives markets, including promoting longer maturity instruments and potentially revisiting cost structures like margins and transaction taxes.
While no immediate changes are being implemented, the incident underlines the market’s heightened sensitivity to potential regulatory actions in the derivatives space.
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