No Concerns In Futures Market, Sebi Keeps Close Watch On Risky Short-Term Options Trading; NSE IPO Gets Initial Nod But Will Take Time

Mumbai: Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey has clarified that the regulator has no problem with the futures segment of the derivatives market. The concern is only about short-dated options, especially those that expire within a day or a few days. He said the issue should not be called a broader “F&O problem” because futures trading has never been a concern. The regulator’s actions are aimed only at risky short-tenor options. Why Short-Term Options Are Risky? Short-dated options, including zero-day-to-expiry contracts, are very cheap and allow high leverage. This means traders can take big bets with small money. But these contracts are extremely volatile and lose value very fast. According to Sebi’s data, over 90 per cent of traders lose money in derivatives trading. Because of this, Sebi introduced measures in October 2024 and May 2025. These were implemented in phases through July, October and December. Pandey said Sebi is now studying market data to see whether these steps are working. If needed, it may take more action, but only after proper consultation. He stressed that Sebi does not want to “flip-flop” or take harsh blanket decisions. Views on Participation Rules There have been suggestions that people from lower-income groups should be restricted from trading in derivatives. Recently, National Stock Exchange of India (NSE) CEO Ashishkumar Chauhan proposed minimum qualifying criteria for derivatives traders. Pandey said Sebi receives many suggestions but has not taken any immediate decision on this matter. NSE IPO and Pre-IPO Plans Sebi granted NSE a no-objection certificate (NOC) in January, allowing it to begin preparations for its long-awaited IPO. However, Pandey clarified that this is only the first step. The draft red herring prospectus (DRHP) process has not yet started, and the listing will take time. On pre-IPO trading, he said Sebi is only at a conceptual stage. If introduced, it will be for a limited time before listing, with strong transparency rules. Mutual Fund Investment Rules Recently, Sebi allowed active mutual fund schemes to invest up to 35 per cent of their extra funds in gold, silver, REITs and InvITs. Pandey said this rule is optional, not compulsory. Clear labelling and transparency will protect investors from confusion.