The capital markets regulator shouldn’t be planning any extra measures to curb or limit exercise in derivatives, Sebi’s Wholetime Member Ananth Narayan stated on Saturday.
An professional group below former RBI government director G Padmanabhan continues to work on bettering the system, and a few strikes on ease of doing enterprise and higher danger administration are being mulled, he added.
“At this cut-off date, there isn’t a considered Sebi taking any additional steps on this explicit regard,” Narayan stated, addressing an occasion organised by Sebi-promoted NISM right here.
He additionally made it clear that the Sebi shouldn’t be mulling any steps on “suitability and appropriability”, which can decide who can commerce within the derivatives market.
It may be famous that in November, Sebi imposed a set of restrictions to curb extremely speculative trades within the futures and choices market after knowledge identified that retail buyers misplaced cash in 93 per cent of the trades over the past three years.
Making it clear that Sebi has nothing towards derivatives and that they assist in value discovery and deepening the market, Narayan assured that the tweaks will likely be launched solely after consultations.
A few of the measures being mentioned throughout the market regulator embody steps to higher measure danger within the derivatives market.
“What you want ideally is that the volumes within the money market must be good and liquid, and there must be depth available in the market. And likewise, the volumes within the by-product market must also have depth, must also have good volumes,” he famous.
It is very important guarantee that there may be some sort of connectivity within the liquidity of the 2 markets, he stated.
“What may be very clear to us is the present method of measuring open curiosity as notional of futures and notional of choices is solely not proper. It offers a really, very flawed image, and there’s a have to debate how we transfer ahead right into a extra significant metric,” he stated.
Narayan stated the Sebi can be contemplating linking market-wide place limits to supply volumes.
Linked to the identical, it’s contemplating a revision of index coaching limits imposed in the course of the COVID pandemic to manage volatility, the WTM stated.
Sebi can be wanting on the query of getting indices with futures and choices with very excessive concentrated weightages of some particular shares from a perspective of making certain belief within the system, Narayan added.
“Usually in social media, we hear murmurs that one thing flawed is going on, particularly in index buying and selling. That there’s some manipulation occurring within the money market, which is resulting in some sort of exercise within the by-product markets, and general, it’s creating…Both big volatility or no volatility and that it’s being achieved as a manipulation for some folks to revenue,” he stated.
One of many questions Sebi is grappling with is whether or not ought to there be restrictions on how a lot weightage the highest inventory or the highest three shares have within the F&O indices.
“…These are a few of the issues that are on our thoughts. What you’ll discover is all of those are largely — both ease of doing enterprise when it comes to growing limits, growing the scope of what may be achieved, or within the nature of creating positive all of us measure our dangers higher,” he stated.
