Proposal To Limit Retail Participation In Derivative Markets Is Rejected By SEBI

The Securities and Exchange Board of India (SEBI) denied reports on a plan to limit retail involvement in equities derivative markets and said that it was thinking about doing a client risk assessment to make it easier for brokers and clients to comply with regulations.

According to a circular issued by Sebi on Saturday (July 29), the regulator is only thinking about simplifying the onboarding process for new customers at stock brokers by using a risk-based strategy.

According to Reuters, India’s market regulator will suggest tying how many stock derivatives individual investors may trade to their wealth in an effort to lower risks for them.

It is clear that there is no plan to limit retail participation in derivative markets, SEBI said in reference to what it claimed were speculative media stories.

However, SEBI said that it was examining whether the current standards for participation in the derivative markets may be expanded to include a customer risk assessment.

The market watchdog published a circular in December 2009 directing stockbrokers on how to deal with their customers in regards to the onboarding procedure, paperwork, and other issues. It had demanded that they have official documentation of each client’s financial capacity.

“SEBI is now assessing whether the aforementioned circular may be made relevant based on the customers’ risk assessments in accordance with the goal of ease of doing business. Brokers and investors would benefit from easier compliance as a result. Additionally, SEBI has never placed any restrictions on trading; instead, it has always prioritized effective risk management while guaranteeing ease of doing business and compliance, according to the circular.

The market regulator reaffirmed that before any decisions are made by the Board, proposals that result in any modification to the regulatory framework go through a process of thorough consultation with all stakeholders, including the public.

In order to prevent manipulation of a company’s share price after it decides to delist from stock exchanges, the market watchdog is reportedly revising the delisting rules for listed businesses.

In contrast to the present reverse book-building procedure, the decision is anticipated to enable corporations to delist shares at a predetermined price. When a listed business delists, the stock market will no longer carry its shares. A company’s securities can no longer be traded on the stock market after it has been delisted.