Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey said the regulator is rolling out a set of steps to bring greater balance to India’s derivatives market. He highlighted that futures and options, especially on the Nifty and Sensex, serve as a bridge between cash‑market trading and speculative activity, but recent spikes in short‑dated index options have exposed systemic weaknesses. The problem, according to Pandey, concentrates around the last few days of each month when expiry‑linked options contract volumes surge. Sharp price swings in those contracts often spill over into the underlying equity indices, amplifying volatility for retail investors who hold positions in the cash market.
In the past quarter, Nifty’s intraday swings widened by nearly 2 percentage points around expiry, prompting concerns among brokerages and individual traders alike. To curb the excesses, SEBI plans to tighten margin requirements for near‑term options, enhance real‑time monitoring of order flows, and introduce a staggered expiry schedule that spreads trading pressure over a longer window. The regulator also intends to improve transparency by mandating more detailed disclosures from market makers and expanding the use of circuit‑breakers for index options. For the average Indian investor, these measures should translate into smoother price movements and lower risk of sudden losses during expiry weeks.
Traders are advised to keep an eye on option chains, especially for contracts expiring within a week, and to consider hedging strategies if volatility spikes. Overall, SEBI’s push for a more disciplined derivatives ecosystem aims to protect retail participants while preserving the market’s depth and liquidity.