Regulator monitoring short-tenor Options; Futures stable: Sebi chief

Mumbai: Sebi chairman Tuhin Kanta Pandey said the regulator has no concerns over the futures segment of the derivatives market, but remains watchful of speculative activity in short-dated options.

Pandey said the regulator’s recent interventions are focused specifically on curbing excesses in short-tenor options, while preserving the crucial role of futures and derivatives in price discovery and liquidity.

Responding to a question on the derivatives segment, Pandey said the issue should not be broadly labelled as one concerning F&O. “You should not be calling it F&O because futures we never had an issue with. There was an issue around short-dated options,” he said in an interaction with PTI.

He noted that Sebi has already introduced a series of regulatory measures targeting excesses in short-tenor options. Measures were rolled out in October 2024 and May 2025, with phased implementation in July, October and December.

The regulator is now assessing the impact of these interventions based on market data. “We are looking at what impact it has based on data. If we think there is still a need for intervention, we will look at different pathways to achieve that goal and have another round of consultations,” he said.

Pandey emphasised that Sebi does not intend to “flip-flop” on the issue or take broad-brush actions. Instead, the regulator aims to identify specific problem areas and address them in a calibrated manner.

Short-dated options, especially zero-day-to-expiry contracts, are derivatives that expire either the same day or within a few days. They are cheap and offer high leverage, which allows traders to bet on or hedge against very short-term market movements. However, these instruments are extremely volatile and lose value very quickly, making them highly risky for retail investors.

Sebi chief highlighted that the futures market and the broader derivatives segment play a crucial role in price discovery and liquidity.

“It is better we concentrate on the problem areas which Sebi itself identified and also put out the data. We issued statutory warnings, introduced measures, and will continue to analyse their impact. This is the path we will follow,” he added.

Earlier in July, Sebi also expressed concern over the growing dominance of ultra-short-term derivatives trading, cautioning that such trends could undermine the health of India’s capital markets.

Responding to suggestions that people from the lower-income strata should be kept out of derivatives trading, the Sebi chief said the regulator receives numerous recommendations from various quarters.

“Everybody can make suggestions. We receive plenty of suggestions through emails and social media, one way or the other,” he said, without indicating any immediate move on the proposal.