F&O Trading: SEBI Not Considering Linking Options Contract To Cash Market Positions

The Securities and Exchange Board of India is not considering linking positions taken through options contracts to cash market positions using a formula. No proposal on further regulations has reached SEBI's secondary market advisory committee either, people in the know told NDTV Profit on Tuesday.

The regulator is not looking at a concrete plan yet and further steps will likely take more consultation and deliberations, the people said.

Earlier during the day, some media reports suggested that the regulator is considering to link positions taken through options contracts to cash market positions using a formula.

The reports come a day after SEBI published a comparative study examining the growth in equity derivatives trading in relation to the cash market. The study was conducted to assess the impact of the measures announced in October 2024, aimed at strengthening the equity index derivatives framework. The analysis covered trading data from December 2024 to May 2025 across both exchanges.

The study found that index options turnover declined on a year-on-year basis. In premium terms, turnover fell by 9%, and in notional terms, it was down by 29%. However, when compared to data from two years ago, the segment still showed significant growth, with a 14% rise in premium terms and a 42% increase in notional terms.

Individual investor activity also showed mixed trends. While turnover in premium terms by individual traders fell 11% compared to last year, it was 36% higher than two years ago. The number of unique individual investors in the equity derivatives segment was down 20% year-on-year, but up 24% when compared to the same period two years earlier.

Despite the recent decline, SEBI observed that India continues to witness a relatively high level of trading in equity derivatives, particularly in index options, compared to global markets. However, the profit and loss analysis revealed that nearly 91% of individual traders in the derivatives segment posted net losses during the financial year 2025.

A similar trend was recorded in the previous financial year.

In response to concerns over excessive risk-taking in the derivatives market, SEBI introduced additional measures in May 2025. These include better monitoring and disclosure of risks, addressing frequent ban periods on single-stock derivatives, and improving oversight of possible concentration and manipulation in index options.

While SEBI remains focused on investor protection and market stability, the people cited above confirmed there is currently no move to link derivatives exposure with cash market holdings through a formula, as had been speculated.