BSE, Angel One Shares Drop Up to 6% After Sebi Chief Proposes Longer Equity Derivative Tenures

 

Shares of capital-market-linked companies BSE Ltd. and Angel One faced selling pressure on Thursday, declining by as much as 6%, following remarks by Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on the need to extend the tenure of equity derivatives contracts. This proposal could reshape trading dynamics in one of the world’s most active derivatives markets.

On the NSE, BSE Ltd. shares dropped up to 5.6% to Rs 2,381.10, while Angel One shares fell 4.6% to Rs 2,597.

Addressing the FICCI Annual Capital Market Conference in Mumbai, Pandey stated, “There is a need to increase the tenure of equity derivatives.” He added that Sebi plans to release a consultation paper to discuss extending the maturities of these contracts.

Pandey highlighted that a surge in derivatives trading, primarily driven by retail investors, has prompted Sebi to implement measures such as limiting the number of contract expiries and increasing lot sizes to raise trading costs.

Market Risks in Focus

India contributes nearly 60% of global equity derivatives volumes, but retail traders have incurred significant losses. According to a Sebi study, retail investors lost Rs 52,400 crore in the year ending March 31, 2024, while proprietary traders earned gross profits of Rs 33,000 crore, and foreign investors gained Rs 28,000 crore.

Sebi has recently introduced stricter regulations, including a cap on end-of-day exposure in options portfolios at Rs 1,500 crore. Additionally, sources familiar with the matter told Reuters that the regulator is considering further restrictions on intraday index derivatives trading to mitigate systemic risks.

Pandey also mentioned that Sebi will collaborate with the corporate affairs ministry and stock exchanges to develop a regulated platform for information on pre-IPO firms.