Sebi set to roll out new risk metrics to curb F&O market speculation

The Securities and Exchange Board of India (Sebi) is poised to introduce innovative risk metrics aimed at curbing speculation in the futures and options (F&O) market. This move comes as part of Sebi's broader strategy to enhance market transparency and stability. The focus will be on implementing a new open interest (OI) method designed to provide a clearer picture of market dynamics, particularly in volatile trading environments. This new OI method will enable regulators and investors to track price movements in derivatives more precisely by comparing them with their underlying securities. By doing so, Sebi aims to offer a more accurate assessment of market trends, helping to identify speculative bubbles before they can significantly impact the financial system. The enhanced metrics are expected to serve as a crucial tool for risk management, benefiting both institutional and retail investors. Market participants have expressed cautious optimism about the impending changes, recognizing the potential for improved market integrity. While some traders may face initial adjustments, the anticipated long-term benefits include reduced volatility and a more robust market structure. As Sebi prepares to roll out these measures, the financial community awaits further details on implementation timelines and operational guidelines, eager to adapt to the evolving regulatory landscape.

— Authored by Next24 Live