SEBI Chairman Tuhin Kanta Pandey on August 6 said reports on curbing weekly expiry are "false and speculative", reported CNBC-TV18.
Following his statement, BSE shares recovered completely and were trading in green.
According to Informist, Pandey said, "...what we have been saying is quite out in the open... as said before, we need some reform but the nature of those reform and how it will get treated as per our practice we always discuss with the market, we put out consultation papers."
Post-Tuhin Kanta Pandey's comment, Nifty Capital Markets index was trading in green after falling as much as 1.5% intraday.
At 12:20 pm on August 6, BSE shares were trading 1% higher at Rs 2,403 apiece after falling as low as Rs 2,282 intraday. Shares of Angel One also recovered to trade 1% higher at Rs 2,625 after trading as low as Rs 2,542 earlier in the day.
Shares of CAMS and Motilal Oswal Financial Services were trading 0.6% and 0.5% higher, respectively.
Prior to Pandey's statement, shares of BSE, other capital market stocks extended their losses to second day after reports emerged that the market regulator is looking to curb weekly expiry as a measure to reduce speculation and instead introduce fortnightly or monthly expiry.
On August 5, CNBC-TV18 reported that Ministry of Finance and SEBI have discussed ways to reduce options volumes and increase cash volumes.
The channel reported that government believes weekly expiry is being used for speculation rather than hedging.
Apart from curbing weekly expiry, SEBI may also consider reducing cash market margin requirement, the channel added.
SEBI may ask Ministry of Finance to considering lowering Securities Transaction Tax on cash market transactions and increase STT on option trades, reported CNBC-TV18.
Last month, SEBI whole-time member Ananth Narayan expressed concerns over huge volume in short-term F&O contracts and also said that the regulator would look improve the quality of the F&O market "by extending the tenure and maturity of the products and solutions on offer".
"As many experts have pointed out, our Indian derivative market ecosystem is quite unique, in that on expiry days, comparable turnover in index options are often 350 times or more the turnover in the underlying cash market –an imbalance that is obviously unhealthy, with several potential adverse consequences," said Narayan at 11th Capital Markets Conclave of CII in Kolkata.
Sebi, in a study published on July 7, said the number of unique individual investors trading in F&O is down by 20 percent compared to the previous year, but it’s up by 24 percent compared to two years ago. In the study, it is seen that traders with total turnover less than Rs 1 lakh witnessed the highest degrowth compared to the previous year. The same bucket witnessed the highest increase in unique investors in F&O compared to two years ago.
The study indicates that the net losses of individual traders widened by 41 percent to Rs 1,05,603 crore in FY25 from Rs 74,812 crore in FY24, after accounting for transaction costs. The percentage of traders making losses in F&O remained broadly unchanged at 91 percent or 9 out of 10 investors, from the earlier study done by Sebi.
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