Sebi weighs margin changes for longer-dated derivatives
The Securities and Exchange Board of India (Sebi) is reportedly considering a review of margin requirements for longer-dated equity derivatives. This move aims to encourage trading in contracts with longer maturities, such as monthly and quarterly options, rather than the current dominance of very short-term weekly contracts.
This policy shift could significantly alter the risk profile for retail investors. Currently, short-term options require lower margins, making them more accessible. Increasing margins for longer-dated contracts may initially raise the capital needed to trade them, potentially reducing liquidity in these specific segments. However, a broader derivatives market is generally seen as more stable and mature.
Investors should monitor the final regulatory guidelines closely. If implemented, this change will likely shift the focus from high-frequency, short-term speculation to more strategic, longer-term hedging and investment strategies.
Excerpt from Mint
Sebi may look to review margin requirements for longer-dated derivatives as it seeks to broaden India’s equity derivatives market beyond the dominance of short-term index options. Mumbai: The Securities and Exchange Board of India (Sebi) is considering whether margin requirements for longer-dated derivative contracts…Read the original at Mint
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