The Securities and Exchange Board of India (SEBI) is reportedly planning to tighten rules on options trading by increasing margins and the Securities Transaction Tax (STT) applicable to such trades. According to a report by Zee Business, the move comes as part of SEBI’s broader effort to address the rising retail frenzy in the derivatives segment.
The regulator is said to be concerned about the growing number of retail investors engaging in high-risk, short-term options bets, especially in weekly expiry contracts, which often lead to heavy losses. By making options trading more expensive and margin-intensive, SEBI hopes to disincentivize speculative behaviour and promote more informed participation.
This comes amid earlier reports in July that SEBI is also considering limiting the frequency of weekly expiries, replacing them with fortnightly expiries to reduce trading volatility. A final decision is yet to be taken, but sources suggest the regulator may soon issue a consultation paper or discussion note on these proposals.
If implemented, these changes could significantly alter the landscape of retail derivatives trading in India, making it more structured and less susceptible to herd-driven short-term speculation.
