Tuhin Kanta Pandey, the chairman of the markets watchdog Sebi, stated on Thursday that the agency is seeking to calibrate and increase the tenure and maturity of equity derivative instruments. He said that over three years, the cash market’s daily trading volumes doubled, demonstrating its rapid growth.
At the FICCI Capital Market Conference 2025, Pandey stated, “We will consult with stakeholders on ways to improve in a calibrated manner and the maturity profile of derivative products so that they better serve hedging and long-term investing.” He emphasised that although equity derivatives are essential to capital formation, the regulator must guarantee their balance and quality.
In addition to improving the quality of derivatives through longer-tenure products, the regulator is looking for measures to deepen the cash equity markets. Ananth Narayan, a longtime member of Sebi, voiced worry last month about the increasing prevalence of ultra-short-term derivatives trading and warned that such patterns could jeopardise the stability of India’s financial markets.
He also considered actions to increase these goods’ longevity and maturity. The market regulator’s study indicates that 91% of individual futures and options (F&O) traders experienced net losses in FY25, totalling over Rs 1 lakh crore in lost revenue that could have been used for capital development and responsible investing.
Pandey stated that artificial intelligence (AI) holds promise for enabling alternative methods of risk assessment and monitoring, fraud detection, and financial inclusion, as well as for opening up new avenues for client involvement. However, growing AI usage may make already-existing issues with cybersecurity and data protection worse.
“We must consider AI to be a tool, not a replacement for human judgment. A tiered strategy, data and cyber safeguards, and unambiguous accountability are highlighted in Sebi’s suggested guiding principles for AI/ML. This conclusion is further supported by the RBI’s free AI committee report,” he said.
