Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey’s recent statement that the market regulator is considering extending the maturity and tenure of derivative contracts has taken many by surprise.
Experts believe that while the intention might be noble, this move will adversely affect the market liquidity. Long tenures are good for protecting retail, and to bring discipline, but need not be in the best interest of India’s equity markets and certainly not in sync with global trends, they said.
“India’s derivatives market is looked upon somewhat enviously. It would be imprudent of regulators to throw this very desirable depth under the bus,” said Mayank Bansal, a Dubai-based hedge fund manager.
Global peers moving in opposite direction
The argument mainly is that while countries around the world are looking for ways to expand derivatives markets, India seems to be taking a step back. The US introduced weekly expiries, saw traction and introduced daily expiries. Even their midcap index Russell 2000 has daily expiries now. Eurostoxx, the European benchmark, has weekly expiries. Asian indices such as Kospi and Hang Seng, and major emerging markets such as Brazil also have weekly expiries.
On its part, SEBI thought process seems to be guided to address problems like excess speculation, manipulation, and persistent retail-trader losses.
As a senior official said, “Trust is built in drops and lost in buckets.” The feedback loop from the industry will be weighed before changes come to effect, he added.
Balancing discipline with liquidity
Neelesh V Vernekar, chief executive of IL&FS Infra Asset Management believes that such a move will bring discipline and trust in the system.
India’s daily average cash market trading in August 2025, was Rs 1.4 lakh crores for the Bombay Stock Exchange (BSE) and it was Rs 13.5 lakh crore at National Stock Exchange (NSE). In July, it was Rs 1.65 lakh crore and Rs 21.8 lakh crore respectively. In the derivatives market, the turnover at BSE was Rs 2.64 lakh crore for the month till 22 August and Rs 23.5 lakh crore at NSE.
“A better solution would have been to increase investor knowledge and chart out risk-appetite, based on retail investor’s net worth,” another fund manager said.
A foreign portfolio manager added that one might argue that as per the (SEBI) proposal, one can simply hedge with monthly options. But that wouldn’t be right. You need volumes to be able to hedge.