NSE chief proposes retail barriers to entry on derivative markets amidst speculation losses

National Stock Exchange (NSE)’s CEO Ashish Kumar Chauhan proposed minimum qualifying criteria for participating in derivatives market akin to Singapore or USA regulators, speaking at a closed door event at Mumbai.

“Developing countries like India cannot allow over speculation by lower strata of the economy. Hence, more and more regulations will come from governments, regulators and exchanges — to curb over speculation till the time perception of the lower strata of society doing over speculation continues. No developing country can allow its lower strata citizens to waste their money, energy and resources over speculation,” said Mr. Chauhan.

His comments come a day after the securities appellate tribunal adjourned the Jane Street’s appeal against SEBI’s interim order alleging it of manipulating the derivative markets. A study by SEBI had earlier noted  91% of retail investors lose in the derivative market and almost all of FPIs traders’ derivative profits came from algorithmic trading. 

While the top boss of the world’s largest derivative market by volume proposed some sort of suitability framework, the Chairperson of SEBI, Tuhin Kanta Pandey, had already made it clear weeks ago on the sidelines of an event that the regulator “was not contemplating” any changes to the current regulations on derivatives. To be sure, measures taken by SEBI in terms of doing away with weekly expiries for some derivative contracts reduced the volumes. Further, the Union Budget announcement to increase securities transaction tax is widely expected to cut volumes.