The Chairman of Sebi, Tuhin Kanta Pandey, stated on Wednesday that the Securities and Exchange Board of India (Sebi) is working to make the derivatives market more balanced. These measures are aimed at positive development of the segment while avoiding unnecessary shocks.
These comments came amid persistently high investor losses in the futures and options segment, despite several measures introduced by the market regulator since 2024.
Pandey noted that the derivatives market is extremely important as it serves as a link between the money market and futures. He emphasized that the problem is not that the derivative has only one product, but that there are complexities, especially concerning short-term index options approaching their expiration date. Unfortunately, the market is skewed towards options trading.
He added that the regulator needs to focus on long-term derivatives, futures, and longer-dated stock options. The Chairman also reported that they are considering changes regarding margin requirements and other issues related to long-term products.
Banks and Capital Markets: Complementary Parts of the Ecosystem
During his address at the SBI Banking and Economy Conclave, Pandey highlighted that while banks played a central role in India's development by providing credit, controlling borrowers, building relationships, and financing projects, the economic needs have become more diverse as the economy grows and becomes more complex.
He stated that the question is not whether banks or markets should finance India's growth, but that both elements are needed, and both must be strong. Banks and capital markets are not competing areas; they represent complementary components of a single financial ecosystem. The role of securities markets in this ecosystem has significantly increased over the last decade.
The Sebi Chairman also noted that policymakers will need to consider simplifying the taxation of debt instruments, as they play an important role for investors.
Pandey also highlighted the steps taken to deepen India's corporate bond market, which currently stands at about 61 trillion rupees, equivalent to approximately 55 percent of the total banking credit to industry and services.
Sebi has already taken several measures: reducing the mandatory threshold for using the Electronic Book Provider platform from 50 crore to 20 crore, shortening the listing period for public debt issuances from T+6 to T+3 business days, and decreasing the minimum nominal value of private debt securities from 1 lakh to 10 thousand rupees.
The regulator has also introduced liquidity windows for non-convertible securities and launched a pilot project for tokenization of corporate bonds under Demat 2.0. Regarding equities, Pandey announced the reduction of timelines for IPOs and additional offerings, as well as the rationalization of listing norms for large issuers, and a proposed revision of the Accredited Investor Framework.
