SEBI Proposes To Simplify Derivatives Rulebook, Cut Compliance For Exchanges

Market regulator Securities and Exchange Board of India (SEBI) has proposed a sweeping clean-up of regulations governing exchange‑traded derivatives, aiming to reduce compliance burden on stock exchanges and simplify market processes without altering risk management norms.

In a consultation paper released on Thursday, the regulator suggested merging, pruning and restructuring large parts of its master circulars covering equity, currency, interest rate and commodity derivatives. The proposals are part of SEBI's broader push for ease of doing business for market infrastructure institutions.

A key proposal is the removal of the “Close‑to‑the‑Money” option series in commodity options, a structure SEBI said adds complexity and uncertainty for traders. The regulator noted that leading global commodity exchanges do not follow the CTM framework and rely only on in‑the‑money and out‑of‑the‑money options.

SEBI has also proposed cutting the mandatory frequency of Product Advisory Committee meetings for non‑agricultural commodities to once a year, citing limited agenda items and difficulties in convening members. Exchanges will, however, retain the flexibility to convene meetings as needed.

Other changes include shifting daily disclosure of derivatives transactions from newspapers to exchange websites, giving exchanges greater discretion in tightening position limits, and removing outdated norms on broker certification and capital requirements.

SEBI stressed that the proposals focus on streamlining processes and eliminating duplication, not on diluting investor protection or risk controls. Public comments are invited until June 4.