SEBI Looks At Longer-Term F&O Contracts To Deepen Capital Markets

India's market regulator is considering measures to broaden the country's capital markets, with the introduction of longer-tenure derivatives contracts emerging as one of the key proposals.

Addressing the ET NOW Markets Summit 2026 on 12 June in Mumbai, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said developing longer-duration futures and options (F&O) contracts in the equity segment would play an important role in strengthening the market ecosystem.

Why Is SEBI Focusing On Longer-Term Derivatives?

Longer-term futures and options contracts remain active for a longer period. Their expiry dates go beyond the usual monthly or quarterly settlement cycles. These products can give investors more flexibility to take positions over an extended horizon, while also improving their ability to hedge risks during volatile periods.

"Development of longer-term futures and options contracts in the equity derivatives market will be an important part of deepening the capital markets," Pandey said.

The SEBI chief added that the regulator is reviewing the securities lending and borrowing framework, along with short-selling rules, to improve linkages between the cash and derivatives segments and boost market liquidity.

He said the regulator has already introduced calibrated measures aimed at strengthening the derivatives market through better surveillance, monitoring, and risk management.

What Other Reforms Are On The Table?

SEBI is also exploring ways to broaden the commodity derivatives market. Among the proposals under consideration are extending early pay-in benefits to options contracts and gradually shifting select agricultural commodities from cash settlement to physical settlement.

In collaboration with the Reserve Bank of India, the regulator is studying the possibility of introducing derivatives linked to bond indices to deepen the debt market.

Beyond trading products, Pandey said SEBI is revamping the Listing Obligations and Disclosure Requirements framework to align with evolving governance standards. The delisting framework is also under review to ensure companies have a fair and efficient exit route from the markets.

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The regulator is reviewing the Innovators Growth Platform as well, with the aim of improving access to capital for sectors such as artificial intelligence, semiconductors, clean energy, biotechnology, advanced materials, defence, and technology.

Pandey said SEBI will continue to prioritise investor awareness through initiatives such as Project Jagrook, adding that India's growth story will ultimately depend on discipline, integrity, and confidence in its institutions.

Sources:

Moneycontrol

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