Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has dismissed recent media speculation that SEBI plans to curb weekly index options expiry contracts, calling such claims “false and speculative.” He reaffirmed the regulator’s intent to push structural reforms in the derivatives market to curb excessive speculation and enhance transparency, without prematurely ruling out possible format changes after detailed study.
Background: Jane Street Fallout & Derivatives Oversight
SEBI recently barred U.S.-based high-frequency trader Jane Street, impounding ₹4,840 crore for alleged expiry-day price manipulation. The episode has accelerated focus on expiry-related market risks.
In May 2025, SEBI had already mandated expiry days to be limited to Tuesdays (NSE) or Thursdays (BSE) and reduced weekly contracts to one index per exchange.
Market Reaction to Speculation
Speculative news triggered a sell-off in capital market stocks: BSE shares dropped nearly 5%, while Angel One, CDSL, and Motilal Oswal shares fell 1–3%.
Following Pandey’s clarification, these stocks fully recovered intraday losses, signaling regained confidence.
SEBI’s Reform Agenda
Despite denying active plans to ban weekly expiries, Pandey confirmed ongoing data analysis of expiry structures and their impact, with reforms following a consultative process.
SEBI is formulating a working group with custodians and market infrastructure participants to study the impact of speculation-driven trading, particularly around expiry days.
Broader reforms are underway—including raising margin requirements for F&O trades, adjusting STT, and encouraging depth in cash markets.
Why This Matters: Risk and Retail Protection
| Key Concern | Implication |
|---|---|
| Expiry-day surge in F&O | Retail investor losses significantly higher |
| Fragmented expiry cycles | Heightened volatility and market fragmentation |
| Forceful short-dated trading | Distortion of price discovery and risk meters |
SEBI’s reforms aim to strike a balance: maintain liquidity for hedging and arbitrage, while discouraging reckless speculation. Its July 2025 study revealed retail trader losses surged to over ₹1.05 lakh crore—marking a 41% year-on-year increase.
Commentary from SEBI Chief
Pandey stressed:
“We’ve always said the derivatives market is important. We will not kill the market—we develop it, not curb it.”
He emphasized reforms will be transparent and discussed publicly, reflecting SEBI’s commitment to governance and investor trust.
Takeaways for Stakeholders
Traders & Investors: No immediate change to weekly expiry formats yet; monitor reforms closely.
Market Players: Prepare for gradual policy shifts toward longer maturity products and higher margin norms.
Regulators & Exchanges: Balance investor protection with market efficiency and liquidity.
