SEBI Considers Longer-Term Equity Derivatives: What Could Change?
About SEBI: The Securities and Exchange Board of India (SEBI) is the regulator for securities markets in India. Established in 1992, SEBI’s mandate is to protect investors, develop the securities market, and regulate intermediaries. It oversees equity, derivatives, mutual funds, and other financial instruments, ensuring market transparency and investor protection.
SEBI Board Meeting on September 12
Sources from ETNow indicate that the upcoming SEBI board meeting on September 12, 2025, will not include discussions on long-term futures and options (F&O) contracts. There is also no proposal to end weekly expiries at this point. However, investors and market participants are keeping a close watch on any developments from the regulator.
SEBI Chairman’s Statement on Extending F&O Tenure
On August 21, 2025, SEBI Chairman highlighted the need to raise the tenure of equity derivatives. The main objective is to allow longer-term derivatives, enhancing the ability of market participants to hedge positions more effectively. He emphasized that the idea is still in the conceptual phase, and no formal decision has been taken yet.
SEBI plans to issue a consultation paper before implementing any changes. This consultation will engage the industry to gather feedback and ensure that the proposed changes in the maturity profile and contract duration are carefully calibrated. The goal is to maintain market quality, balance, and facilitate long-term hedging strategies for investors and institutions.
Impact of Extending Derivative Tenure on Markets
Extending the tenure of equity derivatives could have significant implications for market participants. Longer-term contracts may encourage institutional investors to adopt more strategic positions and reduce short-term speculation. This could potentially stabilize market volatility while offering new avenues for risk management in sectors like banking, IT, and infrastructure.
Traders may benefit from increased flexibility in hedging positions over a longer horizon, potentially reducing the need for frequent contract rollovers. For options traders, the extended tenure might open up new strategies for portfolio insurance and long-term speculation, aligning more closely with real economic exposure rather than short-term market fluctuations.
Industry Consultation and Next Steps
SEBI has stressed that any change will be preceded by thorough consultation with market participants, including brokers, institutional investors, and trading members. The regulatory approach ensures that contract durations are extended without disrupting liquidity or creating systemic risks in the derivatives market.
The regulator’s measured approach also signals a careful balancing act—providing longer-term tools for hedging while preserving market efficiency and protecting retail investors from undue risk.
Investor Takeaway
Investors should monitor SEBI’s upcoming consultation paper closely. While no immediate action is expected, the potential for longer-term F&O contracts could provide strategic hedging options and reduce short-term trading pressure. Market participants can prepare for a gradual shift toward more structured, long-term derivative instruments.
For traders looking to navigate this evolving scenario, SEBI’s approach suggests a focus on quality hedging and measured market strategies. 👉 Nifty Tip | BankNifty Tip
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Conclusion
While SEBI’s board meeting will not immediately decide on longer-term F&O contracts, the focus on extending derivatives tenure demonstrates the regulator’s commitment to promoting long-term hedging, enhancing market stability, and supporting informed trading strategies. Investors and traders are advised to stay updated on any announcements and consult advisory services for actionable insights.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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