SEBI paper on derivatives taking time due to consultative and inclusive approach: Sources

The Securities Board and Exchange of India’s derivative consultation paper is taking time due to its consultative and inclusive approach, people in the know told CNBC-TV18 on Thursday, October 9.Many in the financial markets earn their income via derivatives trading. Regulatory decisions on derivatives must consider the impact on these individuals’ incomes and livelihoods, the sources said.

Speculation and derivates are integral and legitimate components of the financial markets. They are not inherently negative, sources said.

SEBI is exploring multiple steps to protect retail investors from potential losses in derivative markets, they added.Last month, CNBC-TV18 reported that SEBI was likely to issue a consultation paper in a month to consider discontinuing weekly futures and options (F&O) contracts. Sources had said that the regulator was weighing a move towards monthly expiries, with a clearly defined glide path.

Sources had also said that SEBI may explore same-day expiries across exchanges, after NSE shifted its weekly contracts to Tuesday while BSE moved to Thursday.

Later, sources told CNBC Awaaz that SEBI had initiated consultations on the future of weekly derivatives contracts. The market regulator has engaged with large brokerage firms, seeking written suggestions on the possible transition and introduction of longer-term contracts, sources said.

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