Shares of capital market stocks like BSE, Angel One and Motilal Oswal Financial Services cracked up to 6% in intraday deals on Thursday, August 21, after the Securities and Exchange Board of India (Sebi) chief said the market regulator is looking for ways to increase the tenure and maturity of equity derivatives contracts.
Speaking at the FICCI Capital Markets Conference today, Chairman Tuhin Kanta Pandey said, “We will consult with stakeholders on ways to improve in a calibrated manner and the maturity profile of derivative products so that they better serve hedging and long-term investing.”
He emphasised that equity derivatives play a crucial role in capital formation, but the regulator needs to ensure quality and balance.
A consultation paper on the subject will be issued soon.
Why are BSE, other capital market stocks falling?
Against this backdrop, BSE share price declined 6.30% to the day’s low of ₹2,350 on the NSE. Meanwhile, Angel One share price crashed 7% to hit a low of ₹2,538.40.
Shares of Motilal Oswal Financial Services lost nearly 3% to ₹933.85 in intraday deals.
Shares of BSE, Angel One and other stocks came under pressure, reflecting investor concerns over the potential decline in derivatives trading volumes, said Harshal Dasani, Business Head, INVasset PMS.
He added that since exchanges and brokerages earn a significant share of their revenue from high-frequency turnover in shorter contracts, the news triggered swift profit booking across the segment.
According to a Reuters report, derivatives trading contributes more than 50% to BSE’s revenue, and three-fourths to that of Angel One, sparking a decline in companies’ shares.
Derivatives trading has seen a sharp surge in India over the last few years among retail investors, even as more than 90% of the traders suffer losses, according to a Sebi study.
In a bid to protect investor interest, Sebi had to limit the number of contract expiries and increase lot sizes to make such trades more expensive.
The proposed reform is expected to alter trading dynamics in India’s derivatives market, said Dasani. “Extending contract tenures could shift volumes away from weekly products and change the mix of market participation, with implications for exchanges, brokers, and overall liquidity patterns in the months ahead,” he added.
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