SEBI Plans to Introduce Stricter Rules for Derivatives Market: 9.25 Million Investors Lost ₹51,700 Crore in FY23

SEBI plans to introduce stricter regulations for derivatives trading in India. This comes amidst concerns about excessive speculation and significant losses incurred by individual investors in the F&O market. The regulator is expected to issue a draft circular outlining the new rules soon.

CONTENTS:

• Stricter derivative regulations expected soon.
• Individual investors suffered huge losses in F&O.

A draft circular introducing stricter regulations for derivatives is expected to be issued soon, according to sources who spoke to Moneycontrol on the condition of anonymity. These sources also indicated that the draft measures regarding derivatives regulations would not require approval from SEBI’s board.

Despite the high expectations surrounding SEBI’s board meeting on September 30, no changes were made to the rules governing index derivatives. Earlier, on July 9,  It had reported that SEBI was considering a new framework based on the recommendations of a Working Committee on Futures and Options, which was formed to address concerns about excessive speculation in the derivatives market.

SEBI Plans to Introduce Stricter Rules India’s futures and options (F&O) market has experienced a surge in trading volumes since the Covid-19 pandemic, but the majority of individual traders and proprietorship firms have faced significant losses, according to SEBI.

The regulator estimates that around 9.25 million participants incurred losses totaling approximately ₹51,700 crore in FY23, excluding transaction costs. Another recent SEBI study revealed that over the past three financial years, aggregate losses in the F&O market amounted to a staggering ₹1.8 lakh crore, with nearly 93% of over 10 million investors—around nine out of ten—losing an average of ₹2 lakh each.