SEBI Quashes Reports Of Plans To Curb Retail Participation in Derivative Markets

After reports speculating that the Securities and Exchange Board of India (SEBI) is seeking to curb retail participation in derivative markets, the capital markets regulator SEBI on Saturday clarified through a press release that there is no proposal to curb retail participation in derivative markets.

A circular released by the SEBI stated, it is at an early stage of considering simplification of the process of on-boarding of clients by adoption of risk based approach.

Currently, for trading in the derivative segment, the Sebi circular issued in December 3, 2009 prescribes that the stock broker will have documentary evidence of financial capability for all clients under its circular.

Sebi, in line with the objective of ease of doing business, is at an early stage of evaluating if the aforesaid circular can be made applicable based on the risk assessment of the clients, the regulator said through the circular.

This would promote ease of compliance for brokers and investors, it added.

Further, Sebi said its focus has always been on adequate risk management while ensuring ease of doing business and compliance, rather than on placing any curbs on trading.

It reiterated that proposals that result in any change in the regulatory framework, go through a process of comprehensive consultation with all stakeholders including the public, before any decision is taken by Sebi's board.