• UGI USER
  • Jul 22, 2024
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SEBI, RBI CONCERNED ABOUT SURGING F&O MARKET

Why in the news?

  • SEBI and RBI are concerned about the rapid growth in Futures and Options (F&O) trading.
  • The surge is impacting capital formation and posing systemic risks to India’s economic growth.
  • F&O turnover at NSE and BSE increased from ₹2,189 lakh crore in May 2022 to ₹9,504 lakh crore in May 2024 (up 334%).
source:slideshare

About Futures vs. Options (F&O):

  • Meaning: Derivatives based on underlying assets.
  • Futures: Obligatory, unlimited risk/reward.
  • Options: Right without obligation, limited risk/reward.
  • Usage: Futures for speculation/hedging; Options for hedging/speculation.
About Securities and Exchange Board of India(SEBI):

SEBI: Statutory body established April 12, 1992.

Purpose: Protect investor interests and regulate securities markets.

Act: Established under the Securities and Exchange Board of India Act, 1992.

Key points:Reserve Bank of India (RBI)

  • Role: India’s central bank and banking regulator.
  • Established: 1934 under the RBI Act.
  • Ownership: Nationalised in 1949, fully owned by the Ministry of Finance.
  • Function: Regulates currency supply and banking system.