Sebi weighs lower margins for longer-term derivatives as F&O losses stay high: Tuhin Kanta Pandey

Sebi is looking at whether margin requirements can be reduced for longer-term derivative contracts, Chairman Tuhin Kanta Pandey said at a SBI Banking and Economics Conclave on Wednesday, according to CNBCTV18 report. The comments come at a time when the regulator is trying to balance two objectives of reducing speculative excess in short-term derivatives and making India’s capital markets deeper, more liquid and better suited for long-term capital formation.

Sebi has tightened several areas of the F&O market over the past few years, especially around short-dated options and expiry-day trading. Retail losses in derivatives have remained a key regulatory concern. A possible reduction in margin requirements for longer-term contracts would signal that the regulator may not be against derivatives as a product, but wants trading activity to move towards more stable, longer-tenure instruments.

Pandey also said F&O losses remain high, making investor suitability and risk awareness important. Sebi has been repeatedly warning retail traders about the risks in derivatives, where the chance of loss remains high for individual participants.


Further, Pandey said India’s next phase of growth is unfolding in a difficult global environment, with geopolitical tensions, changing trade relationships and capital flows that remain sensitive to global developments. He also said technology, especially artificial intelligence, is transforming businesses and financial markets at a fast pace.

Despite these global risks, Pandey said India’s economic performance has remained encouraging, with strong growth, inflation within the RBI’s target framework and comfortable external buffers. But he added that the more relevant question for the financial sector is what will be needed to sustain growth over the next decade and beyond.

"A growing economy needs a growing pool of capital. More importantly, it needs different kinds of capital, available for different purposes and different periods," he said.

Pandey said banks and capital markets should not be seen as competing channels. India needs both to be strong because different businesses need different kinds of finance. Some need debt, some need equity, infrastructure needs patient capital, and young businesses may need risk capital before they can access conventional debt.

The scale of India’s market expansion has been sharp. Since FY16, India’s market cap has grown at around 17% annually and now stands at about Rs 481 trillion. Indian companies have raised about Rs 10 trillion every year on average through equity and debt issuances in the securities market over the last decade.

Mutual fund assets have grown from Rs 12.3 lakh crore in FY16 to Rs 87 lakh crore by August 2026, while the number of unique investors in the securities market has more than tripled to around 150 million.

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