INDIA: Regulator Proposes Measures to Curb Growth in Derivatives Trading

India’s securities regulator has proposed measures to curb speculation in equity futures and options, a step it said is needed after the explosive growth in derivatives trading in the country, Bloomberg report. The series of steps include raising the minimum contract size of index derivatives, limiting weekly options to a single benchmark of an exchange, collecting options premium upfront and reducing the number of strike prices.

• Officials have been concerned that the surge in equity derivatives may hinder efforts to channel household savings for productive uses. As part of India’s budget last week, the government raised the levy on stocks held for less than 12 months to 20% and to 12.5% from 10% for those held for more than a year.
• On an intraday basis, the measures have not had an impact on the performance of Indian stocks. The Nifty and Sensex indices both closed just above 0.3% higher, following broader gains in Asian equities overnight. Both remain close to record highs.