SEBI is set to soon release a consultation paper on reforms to make derivatives more efficient and transparent
The Securities and Exchange Board of India (SEBI) is examining ways to increase the tenure and maturity of equity derivative contracts, Chairperson Tuhin Kanta Pandey said at the FICCI Conference on Thursday.
This sparked a sell-off in brokerage stocks, with BSE and Angel One falling nearly 7%. Analysts have warned that liquidity and retail participation may take a hit.
What Is SEBI Considering?
He noted that while derivatives trading has surged in recent years, primarily due to retail participation, SEBI has already taken measures such as limiting contract expiries and increasing lot sizes to discourage excessive speculative activity.
Pandey noted that India’s cash market volumes have doubled in three years and said SEBI will soon release a consultation paper on reforms to make derivatives more efficient and transparent.
In addition, he also revealed that SEBI would soon pilot a regulated pre-IPO trading platform. This initiative would allow companies to trade shares before going public, provided they comply with disclosure requirements.
The pilot aims to streamline processes around fundraising, investor onboarding, and disclosures by removing unnecessary bottlenecks.
The new platform would also explore emerging products and asset classes, enhancing both capital demand and supply.
Analysts’ Take
BSE stock witnessed a sharp selloff today, falling over 5% within an hour after SEBI Chairman’s comments triggered market speculation around potential changes to equity derivatives expiries.
Technically, the price dropped from the upper range near ₹2,550 to the lower boundary around ₹2,350, marking another test of the 200-point consolidation zone that has held for five weeks, said SEBI-registered analyst Priyank Sharma.
Unless a breakout occurs, the stock is likely to remain range-bound. A decisive move above ₹2,550 could target ₹2,740, while a breakdown below ₹2,350 may lead to a decline towards the unfilled May gap near ₹2,190, Sharma said.
Markets fell on fears that SEBI could shift from weekly to longer-tenure contracts, which investors worry may hurt liquidity and further reduce retail participation, noted SEBI RA Financial Sarthis.
Brokers and exchanges saw a knee-jerk selloff, adding to pressure, especially as retail volumes are already subdued due to earlier regulations.
Market participants are seeking clarity and consultation. They want SEBI to define what “long-term contracts” mean, actively consider investor opinion, and assess the impact on liquidity and growth. Industry bodies are expected to make formal representations once the consultation paper is out, he said.
Akhilesh Jat noted the impact of the news on BSE and Angel One stocks and said regulatory uncertainty and liquidity concerns could keep investors cautious in the near term.
Technically, BSE trades below its 50-day and 100-day SMAs but remains above the 200-day SMA, showing a pressured medium-term uptrend. The stock hit an intraday low of ₹2,364, with ₹2,280 as key support and ₹2,585 as resistance.
Stocks Update
BSE was the top trending stock on Stocktwits, after plummeting over 7% in afternoon trade. Retail sentiment on the platform turned ‘bearish’ from ‘neutral’.
Angel One was trading nearly 6% lower at ₹2,554.3, adding to its YTD drop of nearly 13%.
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