Sebi set to tighten F&O rules to rein in speculative trading
Mumbai, Sep 26, 2024
Sebi will address the retail speculation in futures and options trading during its board meeting on September 30 while considering stricter rules and margining systems. Additionally, the board might approve a new hybrid investment product for wealthy investors and specific regulations for passive-only fund houses, following extensive feedback on proposed changes.
Markets regulator Sebi is expected to take steps to rein in the retail frenzy in F&O trading in a board meeting on Sept 30. These decisions could include tightening of rules for the speculative futures & options segment of the market and stricter margining system, sources said.
The Sebi board is also expected to give its nod for a 'new asset class' that was proposed by the regulator in July.
It will serve as an investment product for rich investors that would be a hybrid product combining features of mutual fund plans and portfolio management schemes.
Sebi meet
This will be Sebi's first board meeting since US-based short-seller Hindenburg came out with a report on Aug 11, alleging conflict of interest cases involving Sebi chief Madhabi Puri Buch and husband Dhaval Buch. Both have denied all allegations.
The board may also allow a new set of regulations that's aimed at passive-only fund houses since these tech-driven entities do not need to adhere to every stringent norm applicable to actively managed mutual funds.
On July 30, Sebi had floated a consultation paper on some changes that the regulator wanted to bring in in the equity F&O segment. Last month, Sebi chief had said it had received more than 6,000 comments on the same. Among the changes Sebi had proposed is to allow only one index-based weekly contract on each derivatives exchange. The rule could rein in unabated speculative trading in the F&O segment but at the same time could be a drag on the turnover, revenue and hence profits of the exchanges that run these segments, top bourse officials had said.
Speculative trading in the F&O segment has reached a level where, during the three-year period ending March 2024, only 7 out of 100 retail traders had made money, a recent Sebi study showed. Retail traders as a group lost a combined Rs 1.8 lakh crore during the study period, that is FY22 to FY24.
[The Times of India]
