SEBI’s New Rules Slash Derivatives Trading by 37% in December

The Securities Exchange Board of India (SEBI) introduced new measures to curb speculative trading in the derivatives market. These measures led to a 37% drop in derivatives trading volumes in December. The average daily turnover (ADTV) for the derivatives segment fell to Rs 280 trillion, the lowest since June 2023.

SEBI’s new rules include limiting weekly expiry per exchange to one and increasing extreme loss margins (ELM). These changes aim to reduce aggressive speculation and protect investors. The higher contract sizes for weekly derivatives will take effect from January 1, 2025.

The turnover for the derivatives segment is now half of what it was in September 2024, when it reached a record Rs 537 trillion ADTV. The benchmark indices, Sensex and Nifty, have also fallen by over 10% since their highs.

SEBI’s measures followed a study showing that over 90% of individual traders incurred losses in the derivatives frenzy. Some traders continued trading despite consecutive losses. The new regulations have made traders more cautious, and the campaign on investor awareness has also contributed to the decline in volumes.