Business Standard: Getting equity derivatives right
(This article appeared on 15th September 2026 in Business Standard - link https://www.business-standard.com/opinion/columns/getting-equity-derivatives-right-126091400950_1.html ) Getting equity derivatives right Retail participation has moderated, but questions around suitability, market resilience and the dominance of short-term trading remain Derivatives and speculation aid price discovery, improve market depth and allow risk management. They are important for sustained capital formation. That said, since the Securities and Exchange Board of India released its first study of futures and options (F&O) trading in January 2023, three aspects of equity derivatives have warranted attention. First, nine out of 10 individual traders have consistently lost money in F&O, principally in index options. Second, cash-equivalent volumes in index options on expiry days were as much as 700-800 times underlying cash-market volumes. At expiry, prices determined by a relati...