Sebi not in favour of entry barriers for investors in equity F&O segment

Capital market regulator Sebi is not in favour of keeping out investors from the derivatives market, based on any criteria, Moneycontrol learns from sources, at a time when there is a debate over the need for a barrier, or eligibility standard for the entry of investors in the equity derivatives arena.

This is significant as a potential ‘product suitability framework’ has been under discussion for years, and reports are now suggesting that Sebi could explore this option further, given the rising retail interest in the futures & options (F&O) segment and suggestions from market participants.

“Industry players have suggested a product suitability framework under which risky trades are permitted only to people who have the capacity to take it, but this suggestion has been in discussion for years now,” a source familiar with the development said.

“In recent meetings, this has not come up, and there has been no indication that the regulator may propose limiting the number of retail participants in the F&O market based on their skill or capital,” said the source, on condition of anonymity.