Sebi chief says need to raise tenure of equity derivatives

MUMBAI: Indicating more curbs needs to be brought into the derivatives segment, as the volume continue to remain high even after the many measures introduced since last November, Sebi chairman Tuhin Kanta Pandey has said there is a need to increase the tenure and maturity of equity derivatives.

Addressing the industry lobby Ficci-organised annual capital markets summit here, Sebi chairman was quick to add that currently proposal is only a “thought process” and that the industry would be consulted before taking any decision. “A  consultation paper in this regard will be initiated,” Pandey added.

“All this will be done in consultation, in what form, how, when. Yes there will be a consultation paper. I can’t tell you when, but that is the thinking process we have,” Pandey told reporters on later.

The move can potentially have a significant impact for the equity markets going forward, and the regulator assured there will be consultations, and Sebi is right now only proposing an idea for deliberation.

“Improving the tenure of the F&O contract really means whether we can have more longer-term derivatives,” he said, adding, “qualitatively we have to see the duration of the contracts, but we have to calibrate it. This is only in-principle we’re stating, on what we should be doing,” the chairman added.

The equity derivatives arena has been in the focus in the recent past, with the regulator taking various steps to curb the quantum of trading. For instance, Sebi has brought down weekly contracts to one per exchange while also fixing the contract expiry days.