Mumbai: Market regulator Sebi is working on ways to extend the tenure of derivative (futures & options or F&O) contracts, a trouble area for the market regulator, as data show nine out of 10 retail participants lose money in this segment. Currently, retail participants trade more in weekly options contracts than in the relatively long-tenure ones of one-, two- and three-month maturities.Sebi chief Tuhin Kanta Pandey on Thursday hinted that the regulator would look to promote hedging and long-term investing in the market. In contrast, a large number of market experts believe the F&O space in India is used primarily for speculative activities.“We will consult with stakeholders on ways to improve in a calibrated manner and on the maturity profile of derivative products so that they better serve hedging and long-term investing,” Pandey said. He was speaking at FICCI’s annual Capital Market Conference. Market players expect Sebi to now completely ban weekly options contracts, one of the most traded contracts on both NSE and BSE, which also bring in big revenues for these bourses. Post Sebi chief’s comments, the stock prices of BSE crashed over 7.5%. Among the listed brokers with many clients trading in the F&O segment, Angel One was the most affected, with the stock crashing 6.7%.Market players welcome Sebi’s plan for longer tenure F&O contracts. “As the world’s fifth-largest equity market , India needs markets that front-end growth,” said Venkatachalam Shunmugham, Founding Partner, MCQube, a securities market thinktank. “A move to one-monthly expiry helps shift focus back to resilient cash markets and vibrant fundraising,” he said.
