Sebi proposes key tweaks to streamline derivatives trading

Why in news

Sebi proposed eliminating close-to-money (CTM) option series and reducing mandatory Product Advisory Committee (PAC) meeting frequencies to streamline commodity derivatives trading.

Background

Sebi proposed removing CTM options to mitigate price risk for sellers and margin challenges for buyers. The proposal includes reducing PAC meetings for non-agricultural commodities from twice to once annually.

Facts for Prelims

• BodySebi: The primary regulator for the securities and commodity markets in India
• FactProposed reduction of PAC meetings for non-agricultural commodities from two to one per year

For Mains

Q. Discuss how regulatory interventions in the derivatives market can balance investor protection with market liquidity and efficiency.

Dimensions to cover in your answer

• Market risk: Mitigation of price volatility and uncertainty for option sellers in commodity markets
• Regulatory efficiency: Balancing oversight frequency with the operational demands of non-agricultural commodity trading

Keywords: market volatility · regulatory oversight · derivatives trading · price risk · liquidity management

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