India’s Securities and Exchange Board (SEBI) is set to enhance its oversight of the derivatives market to curb manipulation, according to Chairman Tuhin Kanta Pandey. On July 7, 2025, SEBI announced plans to upgrade surveillance systems, focusing on real-time detection of irregular trading activities in equity derivatives. This move follows recent regulatory actions, including a ban on U.S.-based Jane Street Group for alleged index manipulation, which led to the seizure of $567 million in funds.
The initiative aims to protect retail investors and ensure market stability in India, the world’s largest derivatives market, with nearly 60% of global equity derivative trading volume. SEBI’s measures include stricter monitoring of high-volume intraday trades and revised calculations for open interest to better reflect market exposure. Posts on X indicate strong support for these steps, with analysts noting that SEBI’s actions address concerns over speculative trading practices that have previously impacted retail investors.
Since October 2024, SEBI has implemented reforms such as limiting weekly options contracts to one benchmark index per exchange and restricting expiry days to Tuesdays and Thursdays. These changes aim to reduce market volatility and enhance investor protection. The regulator’s recent inspections also uncovered violations by trading members, prompting directives for stock exchanges to enforce corrective actions by July 1, 2025, with penalties for non-compliance.
Pandey emphasized a balanced approach, ensuring regulations do not stifle legitimate market activities while prioritizing systemic stability. The enhanced surveillance is expected to strengthen India’s financial markets, fostering greater trust among investors.
Published in SouthAsianDesk, July 7th, 2025
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