SEBI Weighs Lower Margins For Longer-Term Derivatives Amid High F&O Losses
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SEBI is examining whether margin requirements for longer-term derivatives can be reduced. The main objective here is to curb speculative short-term trading while deepening India’s capital markets.
The Securities and Exchange Board of India (SEBI) is examining whether margin requirements can be reduced for longer-term derivatives contracts, SEBI Chairman Tuhin Kanta Pandey said on 23 September.
The proposal comes as the regulator tries to strike a balance between curbing speculative activity in short-dated derivatives and making India’s capital markets deeper and more suitable for long-term capital formation.
Why Is SEBI Considering Lower Margins For Longer-Term Derivatives?
SEBI is looking at whether margin requirements for longer-term derivative contracts can be reduced. The idea has come as a result of continued concern over losses in the futures and options (F&O) segment, particularly among retail participants.
SEBI has tightened several areas of the derivatives market in recent years, including measures around short-dated options and expiry-day trading. A possible reduction in margins for longer-tenure contracts could encourage trading activity to shift towards instruments with longer maturities.
Mr Pandey also said F&O losses remain high, keeping investor suitability and risk awareness important areas for the regulator.
What Has SEBI Said About India’s Capital Markets?
The SEBI chairman said India needs deeper capital markets to support its next phase of economic growth. He noted that a growing economy requires a larger pool of capital, with different forms of funding available for different purposes and time periods.
According to him, banks and capital markets should not be viewed as competing funding channels. Businesses have different financing requirements, with some needing debt, others equity, while infrastructure projects require patient capital and younger businesses may need risk capital.
How Large Has India’s Market Become?
India's market capitalisation has grown at around 17% annually since FY16 and now stands at about ₹481 trillion. Companies have raised around ₹10 trillion a year on average through equity and debt issuances in the securities market over the past decade.
The mutual funds Assets Under Management (AUM) has gone up more than six-fold from ₹12.3 lakh crore in FY16 to ₹87 lakh crore till August 2026.
On the investor side, the number of new investors in the securities market has increased over three times to about 150 million people.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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