Business Desk mumbai

The Securities and Exchange Board of India (Sebi) has called for “structural reforms” to the country’s vast derivatives market, hinting that a clampdown on options trading could have further to run even after curbing retail activity and temporarily banning US trading firm Jane Street for alleged manipulation, according to a report published by the Financial Times on Monday.

Tuhin Kanta Pandey, chairman of the Sebi, whose action against Jane Street was its most stringent to date, told the FT the regulator was trying to curb unfair practices in the market to protect small investors, as “the volumes have come down but not to the extent that is desirable”. 

“We’ve always said this derivative market is important for us, there’s no way we will kill the market. You develop the market, you don’t kill it.” In its report this month, Sebi said the number of individual traders in Indian derivatives had more than doubled to 9.6mn in the three years to March this year, with those traders’ annual losses ballooning from $4.7bn to $12.2bn. As this trend developed, Sebi raised barriers to entry, among other reforms, with some success—by June this year, the number of traders had fallen by a fifth from a year earlier. “I don’t think we are comfortable with the data yet, but we are putting out the data because we want people to see it,” Pandey said.

In his first comments to a foreign media organisation on the Jane Street issue, Pandey rejected the trader’s defence that Sebi had wrongly characterised its index arbitrage as manipulation.