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)
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