Some Derivative Products “Kal Ho Na Ho”: Says SEBI Chairperson
The Sebi Chairperson, Madhabi Puri Buch said that if it is recommended by the expert committee who contemplating on the F&O segment, the market regulator will be ready to take derivative products off the shelf. She smirks by saying – “Derivative Products “Kal Ho Na Ho”.”
“This is a risk to regulations that the market ecosystem understands”, she added.
To the question asked by a Social Media House, “SEBI will consider any move as a retrograde step that shows as a contraction in trading turnover?”, the Chairperson of Sebi Madhabi Puri Buch said, “Not at all”.
Madhabi Buch outlined the regulator’s concerns about the F&O segment including the nature of trading observed in the segment in the earlier conversation after the SEBI met with its Board, in a press conference held.
“Sebi observed a concentration of trading in weekly options and on the day expiry, which was caused solely by speculation rather than hedging.” She stated.
She further said, “The main question is now what should be done to protect the investor especially when people borrowing money for this speculative activity comes in hearing.” She even provided anecdotal evidence of people losing their houses as a consequence of this.
She answered, “There should be no hesitation of shelving out the derivative products, if the course of action is align with the data and logic”, when a media house asked that will market regulator shelf out the derivative products.
She again said, “If we agree with the logic and if this is what is required at this point and it is the considered view of the expert committee, then why not?”
On the question of stock exchanges and other capital-market-related companies impacted financially, she said, “Yes, we can see financial implications, as you also know to make any business model work, there is some sort of regulatory risk to take. Pharma companies and bankers are the ones who can tell about what regulatory risk is, it is the sad reality that it is a part of business and investors are very cautious and well aware of that.”
She appreciates the market by saying, “The ecosystem of the market is “mature enough” to understand that such types of risks have to be accepted.”
An example of a leading broker who accepts that regulatory risk does affect their business model and speaks about it is given by the SEBI Chairperson.
Nithin Kamath, the Zerodha’s founder had tweeted about regulatory risk after RBI specifically restricted the use of unhedged currency in April 2024. He said, “Earlier, I have said this that the biggest risk for stock brokers so far is regulatory risk.”
She may have pointed out this case. She emphasised that regulatory risk is an element of business not only in India, but all around the world, and that it applies to all sectors, not just the capital market.
