Summary of this article
Sebi chairperson Tuhin Kanta Pandey flagged the need for increasing tenure of equity derivatives contracts
Shares of BSE, Angel One, Motilal Oswal among others fell up to 7.5 per cent
Pandey’s comments come at a time when derivatives trading has been on a surge
Capital market stocks came under pressure on August 21, 2025 after Tuhin Kanta Pandey, chairman of Securities and Exchange Board of India (Sebi) suggested extending the tenure of equity derivatives contracts. Shares of Bombay Stock Exchange (BSE), Angel One, Motilal Oswal and Multi Commodity Exchange of India (MCX) slipped as much as 7.5 per cent during the session.
The market regulator chairman’s commends triggered anxiety among investors about the the potential implications of trading activity in the futures and options (F&O) segment of the equity market, and the raised concerns over the profitability of brokers and exchanges.
Ravi Singh, senior vice president - retail research, Religare Broking, said, "This proposal triggered selling pressure in brokerage and exchange stocks, anticipating a reduction in trading volume and declining revenues."
BSE Leads Decline
Leading the decline, BSE shares fell up to 7.76 per cent to hit the day’s low at Rs 2,327.10 apiece. Following BSE, brokerage firm Angel One shares plummeted up to 7 per cent to the day’s low at Rs 2,529.60 apiece. MCX also plunged as much as 4 per cent to the day’s low at Rs 7,892.50 per share.
Other capital market stocks such as 360 One Wam, Motilal Oswal Financial Services, and UTI Asset Management Company also declined between 1 per cent and 2 per cent.
The Nifty Capital Market index, which constitutes of 15 stocks from the Nifty 500 index which caters to the capital market theme, accordingly, declined more than 2 per cent.
Currently, A Thought Process
While speaking at FICCI's 22nd annual Capital Markets Conference in Mumbai on August 21, the Sebi chairperson emphasised the need for extending the tenure of equity derivatives. He said that this is currently a "tought process" and a consultation paper on the same will be floated after having discussion with stakeholders.
"Improving the tenure really means whether we can have longer-term derivatives," he added.
Pandey's comments come at a time when derivatives trading has been surging, led largely by retail investors. This has already led Sebi to tighten the F&O rules such as limiting the number of contract expiries and increasing lot sizes, making trades expensive with the aim of discouraging excessive retail participation.
What It Means For Retail Traders
According to Ravi Singh of religare Broking, extending the tenure of equity derivatives contracts could be positive for the market as it would give retail traders more time to hold positions, plan strategies and align trades with a broader market view. "Right now, traders usually work within short monthly cycles, which forces many to take quick and speculative bets. If the tenure is extended, retail participants will get more time to carry positions, plan strategies, and align trades with their broader market view," he said.
He explained that this flexibility could lead to higher trading volumes, as participants won’t have to exit or roll over contracts as frequently. "For retail traders, it means more room to manage risk and take positions based on fundamentals rather than just near-term momentum," he added.
However, he cautioned, longer contracts also require discipline, since holding power and margin management become important.
"Overall, it could shift the market slightly away from short-term trading towards more balanced participation, which benefits both exchanges and investors," Singh added.
