look news india
AHMEDABAD: Derivatives trading volume declined by 37 per cent in December compared to November due to the market regulator’s recent measures to curb traders’ obsession in the derivatives segment. The average daily turnover in the derivatives segment so far this month was Rs. 280 lakh crore, which is the lowest level since June 2023. In November it was Rs 442 lakh crore. This is the first month after the new rules came into effect.
Industry participants are not ruling out the possibility of further losses as higher contract sizes for weekly derivatives come into effect from January 1. Three other decisions will also come into effect at different times next year.
The first weekly expiry of Nifty-50 weekly contract with the revised contract lot size will be on January 2. SEBI sources said that after the recent changes, the notional volume of derivatives has come down by 35-40 per cent while the premium volume has come down by 8 per cent. The price per contract has increased by 50 percent.
To mitigate the potential risk due to rising volatility, the exchanges have discontinued weekly contracts of Nifty Bank and Bankex, while now imposing 2 per cent ELM on short positions on the day of expiry. Derivatives regulation will be an ongoing process aimed at prioritizing investor protection and curbing aggressive speculation during expiry in index derivatives.
The turnover of the derivatives segment is now half of what it was in September. At that time, the benchmarks Sensex and Nifty hit record highs with an average daily turnover of Rs. 537 lakh crore was recorded at a record level. From their highs, the benchmark indices fell 10 per cent in less than three weeks. The huge fall in the market has also affected the trading volume, which is a sign of cautious trend.
SEBI regulations have impacted the market volume. The campaign launched over the past few months to make investors and traders aware of the risks and pros and cons of the derivatives market has also inspired new traders to adopt a cautious approach while taking positions. SEBI’s move on the F&O front comes after its earlier study. At that time SEBI had said that more than 90 percent of individual traders were incurring losses in derivatives. However, some of them continued to trade even after consecutive years of losses.
