The move comes as the capital markets regulator continues to recalibrate the futures and options (F&O) segment following concerns over high losses among individual traders and the broader functioning of the derivatives market.
Pandey said SEBI has already taken various measures for the F&O market, but the regulator is continuing to look at ways to improve its functioning.
The comments also come as SEBI works on another issue that has attracted considerable attention from market participants — how derivatives contracts are settled on expiry days.
Expiry-day settlement prices under review
SEBI had earlier this month floated a consultation paper seeking public comments on proposed changes to the methodology for determining expiry-day settlement prices for index and single-stock derivatives.
The proposals include delinking derivatives settlement prices from the cash-market closing price, discontinuing live indicative index values during the Closing Auction Session (CAS), and making orders placed beyond the 1% band more binding.
“Having successfully established the Closing Auction Session as an important market structure reform, we intend to address concerns in respect of settlement price for derivatives on expiry days and other related issues,” Pandey said at the 11th JP Morgan India Conference on Tuesday.
“A consultation paper has already been issued inviting public comment,” he added.
The September 12 consultation followed feedback from market participants on using the CAS-determined closing price to settle derivative contracts on expiry. Determining derivative settlement prices based on the closing price arrived at through CAS was among the key areas of feedback received by SEBI.
CAS was introduced in the equity cash segment for stocks with derivative contracts from August 3, with the aim of facilitating more efficient and transparent price discovery of closing prices.
Banks, capital markets need to keep pace with growth
Beyond market structure and derivatives, Pandey said India’s broader growth ambitions will require a significantly larger pool of capital.
“India’s economic growth has been encouraging,” he said, while noting that a growing economy needs a growing pool of capital to fund infrastructure, micro, small and medium enterprises (MSMEs) and businesses.
Pandey said India’s financing requirements are becoming more diverse, making the role of both banks and capital markets increasingly important.
“Banks and capital markets are complimenting each other for India’s capital requirement,” he said.
Reserve Bank of India Deputy Governor Poonam Gupta, also speaking at the SBI Conclave, made a similar point from the broader financial-market perspective, saying the bond market has performed well for most parts, while equity markets have not tracked the same optimism as the underlying economy.