New Delhi: Markets regulator SEBI is considering rationalising margin requirements for longer-tenure derivative contracts as part of efforts to encourage healthier and more long-term participation in the futures and options (F&O) market, Chairman Tuhin Kanta Pandey said on Wednesday.
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“SEBI is open to reviewing and potentially lowering margin requirements for longer-tenure derivative products to encourage healthier, long-term participation in the Futures & Options market,” Pandey said on the sidelines of the 13th SBI Banking & Economics Conclave.
The regulator is examining structural measures, including possible changes to margin requirements for longer-duration contracts, he said.
Pandey said SEBI's approach is aimed at making markets easier to access without compromising investor protection and trust.
“Ease of doing business and investor protection are not competing objectives,” he said while addressing the conclave.
“Optimum regulation can reduce unnecessary friction. Our objective is therefore to make markets easier to access, while preserving the trust on which those markets are built,” he added.
His comments come as regulators focus on risks faced by retail investors in the equity derivatives segment, where leveraged positions can lead to substantial losses.
Pandey said India's financial markets have expanded significantly, but their next phase of development should not be judged merely by size.
“We also need to ask: Are our markets becoming deeper and more liquid? Are we creating adequate pools of long-term capital?” he said.
He also stressed the importance of informed participation as more investors enter the markets and gain access to new financial products.
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The SEBI chief said India's growing economy requires different forms of capital for different purposes and tenures, making both banks and capital markets important components of the financing ecosystem.
Banks and capital markets should therefore be viewed as complementary rather than competing sources of finance, he said.
Pandey said Indian financial markets would need to become “deeper, more diverse, efficient, resilient and trusted” as the economy enters its next phase of growth.
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