This technical note is a response to the SEBI discussion paper on growth and development of equity derivatives markets in India. It provides analysis on a range of issues concerning the equity spot and derivatives markets. These include:

1. The type and quality of participation in these markets;

2. Requirements for aligning the two markets;

3. A product suitability framework for equity derivatives;

4. Aadequacy of the current margining system for equity derivatives and the system for for introducing new products and setting margins, position limits and contract sizes;

5. Other inefficiencies and regulatory arbitrage opportunities in the equity markets. The analysis and recommendations offered in this note can aid policy thinking on enabling the second round of reforms in the equity markets.



Citation: Response to SEBI discussion paper on growth and development of equity derivatives markets in India, Anjali Sharma, Susan Thomas, Diya Uday, Bhargavi Zaveri. FRG Policy Note, 2017-08-10 August 2017.