NSE MD proposes minimum eligibility criteria in F&O trading, flags more curbs if retail speculation persists

Chauhan suggested India could consider a minimum eligibility framework for derivatives trading, on the lines of regulatory models in countries such as Singapore and the US

• NSE CEO urges minimum criteria for derivatives market entry
• India may adopt eligibility checks for F&O trades like Singapore, US
• STT on F&O to increase, RBI tightens trading funding rules

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NSE’s MD & CEO Ashish Chauhan calls for need to introduce minimum qualifying criteria for participation in the derivatives market, as concerns around excessive retail speculation continue to mount.

Speaking at the Futures Industry Association conference in Mumbai, Chauhan said that while derivatives markets will become even more critical over the next 20–50 years due to rapid technological shifts, geopolitical churn and evolving financial systems, a developing country like India cannot allow unchecked speculation by economically vulnerable sections of society.

He stated that regulators and exchanges will continue to step in with tighter rules as long as there is a perception that the lower strata of society are disproportionately participating in high-risk F&O trades and losing money.

Chauhan suggested India could consider a minimum eligibility framework for derivatives trading, on the lines of regulatory models in countries such as Singapore and the US, where participation is subject to suitability checks, financial thresholds or knowledge assessments. He said, most countries have already adopted this regime and it is high time India adopts to that so that the protection required for lower strata is adequately provided and government objectives are fulfilled.

In the recent past, SEBI had to take various measures by regulator Securities and Exchange Board of India (SEBI) aimed at curbing speculative excesses in the F&O segment, including changes in contract specifications and risk management norms.

In Union Budget government hiked the Securities Transaction Tax (STT) on F&O trades and recently banking regulator RBI tightened the funding norms for proprietary trades, both the measures proposed to be applicable from April 1, are expected to affect the derivatives trading.

In Union Budget 2026–27, the government proposed raising STT on futures contracts to 0.05 percent from 0.02 percent. STT on options premium and on the exercise of options has been proposed to be increased to 0.15 percent from the current 0.1 percent and 0.125 percent, respectively. Other STT rates across asset classes remain unchanged. The government said the total volume of options and futures trading in India is more than 500 times the country’s GDP, justifying the need for a rate adjustment to curb purely speculative activity.

On the other hand RBI in its recent direction to banks, has largely barred from financing proprietary trading, except limited market-making. Most exposures must now be fully collateralised with a strong cash component, shifting from earlier partial collateral norms. Intraday funding has also been tightened and will be limited mainly to settlement pay-ins, not margin needs. Brokers believe the move will raise funding costs, strain derivatives operations, and tighten liquidity, especially near expiry periods and high-margin client exposures.