SEBI F&O Curbs: Exchanges To See Full Impact After All Measures In Place, Says BSE Chief

The Indian market regulator's crackdown on F&O trading is starting to show impact and the full scale of it will be clearer once all the measures are in place.

The full impact of the measure will be assessed after the remaining measures are implemented this year, according to Sundararaman Ramamurthy, Managing Director and Chief Executive Officer of BSE.

The total F&O turnover in the Indian markets after the curbs imposed by Indian market regulator saw a fall in the month of December. In fact, the BSE saw its notional volume drop by approximately 20% in the month, according to an Institutional Research report. The NSE also recorded a 13-month low in its F&O turnover in the same period.

Premium quality will be in focus as a chunk of the exchange's income depends on it, Ramamurthy told NDTV Profit in a televised interview.

To put things in perspective, the Indian market regulator, SEBI, in a bid to curb excessive speculation in equity derivatives, proposed new measures, including increasing the lot size and mandating the upfront collection of option premiums from buyers by trading members and clearing members.

The market regulator's directive restricting the number of weekly products has resulted in improving the quality of premiums as investors target products for the long term, Ramamurthy said. "Retail volumes going down have reduced the notional volumes from what it was before."

The improvement in the premium quality comes from the participation of institutional, proprietary trades, while retail volumes have fallen, Ramanmurthy added.

Unlike earlier, high activity on the expiry and the day before has fallen as traders eye long-term, which involves higher premiums. "When the trade is for longer-dated options, the quality of premium—the premium per crore of notional traded—improves.

According to Ramamurthy, 2024 was a year of sorts with "significant large movements of ups and downs" in the market. "Midcap appeared to be the flavour of the year."

Going forward in 2025, "it's a mix of multiple things," he said. A strong and stable regulatory regime, policy formation capability, a thrust on 'Make in India' and ease of doing business, fiscal discipline and rate cuts, and good pipelines of public issues point out a positive picture for domestic markets.

However, the geopolitical situation is something that cannot be ignored, he added. The new US government and its ramifications on multiple factors, including H-1B visas and trade, should be in focus. "With positives that India internally has, markets will surge ahead."