In a move that will likely bring cheer to F&O traders, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey has clarified that the regulator is not currently considering any new restrictions on equity derivatives (F&O) trading. This announcement comes shortly after the Union Budget 2026-27 proposed an increase in the Securities Transaction Tax (STT) on derivatives, a move intended to curb speculative trading.
Pandey's statement provides reassurance that the existing F&O framework, including the widely used weekly expiry structure, will remain in place. Speaking on the sidelines of a corporate bonds outreach program organized by SEBI and stock exchanges, Pandey stated, "At the moment, we are not contemplating any measures. And whatever framework that we have put in place, that will continue,". He also emphasized that SEBI is taking a methodical, data-driven approach to the derivatives market.
The STT on futures contracts has been increased from 0.02% to 0.05%, while the tax on options premium and exercise of options have risen to 0.15% and 0.125% respectively. While this increase led to mixed reactions, with some fearing dampened market sentiment, others welcomed it as a measure to reduce speculative trading among retail investors. Zerodha founder Nithin Kamath suggested the STT hike may backfire by driving traders to the options segment, which is considered more speculative.
The SEBI chief's recent comments have quelled speculation about further tightening of regulations in the derivatives space, particularly regarding the potential termination of weekly expiry contracts. This reassurance led to a positive response in the stock market, with shares of capital market companies like BSE, Nuvama Wealth Management, and Angel One recovering and closing higher.
With the derivatives segment facing tax adjustments, SEBI is now focusing on developing India's corporate bond market. Pandey highlighted the necessity of a strong debt market to support sustained economic growth, reducing the reliance on traditional bank credit. Outstanding corporate bonds have grown substantially, from approximately ₹17.5 trillion in fiscal year 2015 to nearly ₹58 trillion by December 2025, now representing about 60% of bank credit to industry and services. However, corporate bonds still only account for about 16% of India's GDP, lagging behind other Asian markets.
SEBI has identified key challenges in the corporate bond market, including a narrow issuer base and low retail participation. To address these issues, SEBI has implemented "optimum regulation" strategies, such as easing compliance for high-value listed entities, reducing the minimum investment threshold to ₹10,000, promoting online bond platforms, and strengthening market infrastructure. Further reforms proposed in the Budget, including market-making frameworks and bond index derivatives, are currently under review with stakeholders to improve secondary market liquidity.