SEBI Mulling Longer-Dated Contracts To Promote Long-Term Investing

The Securities and Exchange Board of India is closely monitoring the Indian futures and options markets to safeguard investor interests, ensure market stability, and encourage long-term capital formation, according to people familiar with the matter.

Sources told NDTV Profit that while retail participation in index options on expiry days has slightly declined in recent times, an overwhelming majority—nearly 90%—of these retail traders still end up losing money.

Concerns remain about the high concentration of trading activity in short-term expiries and a growing trend of speculative short-term trades, the sources added.

One person familiar with the issue added that such a shift would be healthier for the overall market ecosystem. SEBI has been introducing a series of measures in recent months to curb excessive risk-taking and improve investor awareness in the derivatives segment.

The regulator recently also moved towards a delta-based open interest metric instead of the traditional notional method. This approach accounts for the actual economic exposure of options trades rather than their notional size, which can be misleading.

Apart from this, the regulator has also allowed a net end of the day limit of Rs 1,500 crore and a gross limit of Rs 10,000 crore (each side) for Index Options, they hinted. As per the previous proposal of the regulator, the net end-of-day limit was Rs 500 crore, only with a gross limit of Rs 1,500 crore.