InvestorQ : What could be the impact of the SEBI planning to extend the curbs on derivatives transactions in the Indian F&O market?
Anamika Sodhani made post

What could be the impact of the SEBI planning to extend the curbs on derivatives transactions in the Indian F&O market?

Answer
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6 months ago


One impact that is already visible is that India seems to have exported volumes on F&O to the Singapore market, which is making the best of the sharp increase in regulation of derivatives in the Indian market. It may be recollected that SEBI had imposed curbs on derivative trading to curb speculation. However, it has prompted a number of active foreign funds and proprietary desks to move their equity derivatives bets from Mumbai to Singapore. Nifty is traded on the SGX and is dollar denominated with twice the lot size. Total Nifty futures contracts traded on the SGX jumped 250% in March while derivatives turnover dropped by 25% on the NSE. SEBI had imposed restrictions on big trades including short-selling and had also enforced enhanced margins. Lower costs and controls have pushed FPIs from the NSE F&O segment to SGX. This is something India had seen earlier in 2012 when the GAAR announcement had led to a huge shift in F&O volumes to the SGX.