SEBI Forms Working Group to Review Derivative Trading Norms.

The Securities and Exchange Board of India (SEBI) has established a 15-member working group to review derivatives trading norms, aiming to enhance investor protection and risk management.

Key Details:

•⁠ ⁠Leadership: The panel will be led by G. Padmanabhan, former Executive Director of the Reserve Bank of India (RBI).

•⁠ ⁠Composition: Members include representatives from the market ecosystem such as exchanges, brokers, and academicians.

•⁠ ⁠Objectives: The group is tasked with improving the risk architecture of exchange-traded derivatives and boosting investor protection.

Upcoming Proposals:

In its upcoming board meeting this week, SEBI will discuss a proposal regarding the eligibility criteria for single stocks to enter the derivatives segment.

Recent Developments:

•⁠ ⁠F&O Eligibility: A separate SEBI committee, including members from stock exchanges and brokerage firms, recently reviewed feedback on the proposal for Futures and Options (F&O) eligibility.

•⁠ ⁠Retail Participation: Despite a study showing nearly 90% of retail participants incur losses, their participation in the F&O segment has significantly increased.

•⁠ ⁠Monitoring by RBI: Earlier this month, RBI Governor Shaktikanta Das mentioned that both SEBI and RBI are closely monitoring the rising volumes in the derivatives segment.

Source: Business Standard

Author: Kaustav Mitra, MBA(Finance)