India’s Options Trading Boom? NSE Chief Says ‘Misleading’—Calls for Major Reform!

NSE’s MD & CEO, Ashish Chauhan, highlighted that while India leads in derivatives trading, the average per-trade value of options remains low at around $100, significantly less than in developed markets. Speaking at the Moneycontrol Global Wealth Summit 2025, he cautioned that India’s No. 1 ranking in derivatives can be misleading and emphasized the need to focus on long-term market sustainability rather than just trading volumes.

Chauhan also raised concerns about market fragmentation due to multiple exchanges introducing their own daily expiries, despite SEBI’s efforts to regulate them. He advocated for a single expiry date across all exchanges to maintain stability and protect retail investors.

India’s Options Trading Boom? NSE Chief Says ‘Misleading’—Calls for Major Reform!

India’s Derivatives Market: A Closer Look Beyond the Numbers

Ashish Chauhan, Managing Director and CEO of the National Stock Exchange (NSE), recently addressed critical concerns about India’s booming derivatives trading market at the Moneycontrol Global Wealth Summit 2025 in Mumbai. While acknowledging India’s global leadership in derivatives trading volumes, Chauhan cautioned against viewing this achievement in isolation. He highlighted significant structural and qualitative gaps that, if unaddressed, could undermine the market’s long-term health.

 

The Illusion of Volume Dominance

India’s derivatives market has garnered global attention for its staggering trading volumes, consistently outpacing counterparts in developed economies. However, Chauhan urged stakeholders to look beyond the headline numbers. He revealed that the average value of an options trade in India hovers around $100—a figure dwarfed by the significantly higher per-trade values in markets like the U.S., Europe, and Japan. This stark contrast, he argued, exposes the limitations of comparing India’s derivatives ecosystem to mature markets.

“Ranking first in trading volume might create a misleading narrative. It’s akin to comparing grapes to watermelons,” Chauhan remarked, emphasizing that volume alone does not translate to market depth or sophistication.

The low per-trade value reflects a market dominated by small-ticket, short-term speculative trades, often by retail participants. While this has democratized market access, Chauhan stressed the need to balance quantity with quality. A market skewed toward high-volume, low-value trades risks instability, as it may lack the stabilizing influence of long-term institutional investors.

 

The Call for Sustainable Growth

Chauhan’s critique centered on the broader implications of this trend. He advocated shifting the focus from chasing trading volumes to building sustainable market value.

“Our obsession with volume metrics overlooks the importance of creating lasting wealth for investors and ensuring market resilience,” he stated.

For India’s derivatives market to mature, he emphasized the need to attract more institutional players, encourage hedging strategies, and foster products that align with long-term financial goals.

This perspective aligns with global trends, where mature derivatives markets serve as risk-management tools for businesses and investors rather than platforms for speculation. Chauhan’s remarks underscored the urgency of diversifying market participation and improving product depth to mirror the balance seen in developed economies.

 

The Expiry Date Conundrum

Another critical issue Chauhan addressed was the growing fragmentation of India’s options market due to inconsistent expiry dates across exchanges. Derivatives contracts have predefined expiry dates, after which they settle. In recent years, multiple exchanges have introduced varying expiry schedules, including daily expiries, to attract traders. While this may boost short-term activity, Chauhan warned it could harm market integrity.

The Securities and Exchange Board of India (SEBI) has attempted to curb this fragmentation by limiting weekly expiries. However, exchanges continue to set independent expiry dates, circumventing regulatory intent. Chauhan illustrated the absurdity of the situation:

“If this continues, we might need to invent new days of the week to accommodate expiry dates.”

He proposed a unified expiry schedule across all exchanges to streamline operations, reduce complexity, and enhance transparency.

A single expiry date would mitigate systemic risks, such as undue volatility around multiple settlement periods, and prevent market manipulation. It would also align India’s practices with global standards, where standardized expiries promote efficiency. For retail investors—who comprise a significant portion of India’s trading base—this reform could reduce confusion and level the playing field.

 

Balancing Innovation and Regulation

Chauhan’s comments reflect a nuanced understanding of India’s market evolution. The surge in retail participation, fueled by tech-driven platforms and financial literacy campaigns, is a double-edged sword. While it democratizes finance, it also amplifies risks for inexperienced investors lured by the allure of quick profits. The proliferation of complex products like weekly or daily options exacerbates these risks, as retail traders may lack the expertise to navigate such instruments.

SEBI’s regulatory interventions, such as stricter margin norms and eligibility criteria for derivatives trading, aim to protect investors. However, Chauhan’s push for unified expiries suggests that exchanges must also collaborate with regulators to prioritize stability over short-term gains.

 

The Road Ahead

Chauhan’s critique is a wake-up call for India’s financial ecosystem. While the derivatives boom signifies growing market participation, it also highlights the need for structural reforms. Key steps include:

1. Enhancing Market Depth – Encouraging institutional participation through tailored products and regulatory incentives.
2. Investor Education – Implementing robust financial literacy programs to help retail traders understand derivatives risks.
3. Harmonizing Standards – Adopting unified expiry dates and aligning product design with global best practices.

In conclusion, India’s derivatives market stands at a crossroads. Leadership in trading volumes is an achievement, but true success lies in building a market that balances innovation with resilience, speculation with stability, and short-term activity with long-term value creation.

As Chauhan aptly summarized:

“The goal isn’t just to be the largest market, but to be a market that sustains wealth and fosters trust for generations.”

This vision demands collaboration among exchanges, regulators, and participants to ensure India’s financial markets mature into a robust pillar of the economy.