Mumbai: The Securities and Exchange Board of India (SEBI) has announced several new measures aimed at curbing speculative trading in the futures and options (F&O) segment. This move comes as a response to alarming statistics indicating that nine out of ten participants have consistently lost money over the past three years.

Increased Minimum Contract Size
One of the key measures introduced by SEBI is the increase in the minimum contract size for index derivatives. The contract size will rise from Rs 5 lakh to Rs 15 lakh, making it less accessible for casual traders and potentially reducing speculative trading.

Reduction of Weekly Expiry Count
In another significant change, SEBI has reduced the weekly index expiry count to one per exchange. This means that exchanges can now only offer one expiry per week on a benchmark index.

"In order to specifically address this issue of excessive trading in index derivatives on expiry day, it has been decided to rationalise index derivatives products offered by exchanges which expire on a weekly basis. Henceforth, each exchange may provide derivatives contracts for only one of its benchmark index with weekly expiry," SEBI stated in a circular.

Addressing Heavy Losses Among Retail Investors
These measures are a direct response to the heavy losses incurred by retail investors in the F&O segment. A recent study released by SEBI reveals that over the last three years, 1.10 crore traders have collectively lost Rs 1.81 lakh crore. Remarkably, only 7 per cent of traders have been successful in making a profit during this period.

Impact on Derivatives Contracts
Following the new SEBI circular, the size of derivatives contracts in benchmark indices such as Nifty and Sensex will increase from Rs 5 lakh-Rs 10 lakh to Rs 15 lakh-Rs 20 lakh. This change will take effect for all new index derivatives contracts introduced after November 20, 2024.

Growth of India's Derivatives Market
The derivatives market in India has seen significant growth in recent years. A recent SEBI paper indicated that India's derivatives market has surpassed the cash market. Currently, India accounts for 30 to 50 per cent of the total global derivatives trading.

According to data, the cash market turnover in India has doubled from FY 20 to FY 24, while the turnover of index options has increased twelvefold to Rs 138 lakh crore in FY 24, up from Rs 11 lakh crore in FY 20.