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SEBI Reconsiders Derivative Settlement Rules Following Market Pushback

Source:The Hindu ↗

কেন এটি গুরুত্বপূর্ণ

This development illustrates the dynamic challenges faced by financial market regulators like SEBI in balancing systemic risk mitigation and market liquidity, a core theme within Indian financial sector reforms and economic governance.

সারসংক্ষেপ

According to sources, the Securities and Exchange Board of India (SEBI) is set to partly reverse its recently introduced derivative settlement rules following strong pushback from market participants and stakeholders concerned with market liquidity and operational friction.

মূল বিষয়

  • SEBI is reportedly planning to partly reverse its recent derivative settlement rules following pushback from market participants.
  • The changes relate to modifications in the settlement cycle or margining framework for derivatives aimed at curbing speculative trading and systemic risks.
  • Highlights the balance regulators must maintain between financial stability (risk mitigation) and market liquidity/ease of doing business.

গুরুত্বপূর্ণ শব্দ

Securities and Exchange Board of India (SEBI)

Statutory regulatory body established in 1992 to protect investor interests, promote the development of, and regulate the securities market in India.

UPSC context

UPSC CSE Prelims and Mains (GS Paper III - Indian Economy/Mobilization of Resources): Tests role and functioning of financial sector regulators.

Source
Closing Auction Session (CAS)

A mechanism introduced by SEBI to determine end-of-day closing prices via a short auction session at trading day end.

UPSC context

UPSC CSE Prelims and Mains (GS Paper III - Financial Markets): Important for questions on market reforms, volatility, and regulatory interventions.

Source

প্রিলিমস ফাঁদ

SEBI statutory rules are final upon notification and cannot be modified following stakeholder representations.

Aspirants often assume SEBI's quasi-legislative and quasi-judicial decisions cannot be appealed or modified, missing that SEBI regularly reviews and amends rules based on SAT and stakeholder feedback.

সংযুক্ত স্থির ধারণা

Indian Economy Financial Markets

What are the primary statutory powers and functions of SEBI under the SEBI Act, 1992?

  • Mandate: Protects the interests of investors in securities and promotes the development of securities markets.
  • Regulatory Scope: Empowered to regulate stock exchanges, depositories, clearing corporations, and mutual funds.
  • Enforcement: Can frame regulations, conduct inquiries, audit books, and levy monetary penalties for insider trading or market manipulation.

আন্তঃবিষয় প্যাটার্ন

  • SEBI derivatives vs RBI monetary policy liquidity

    SEBI's friction vs liquidity trade-off in derivatives directly mirrors RBI's liquidity management via variable rate repo auctions to cool credit growth.

  • F&O retail surge and systemic household risk

    Retail participation surges in F&O markets connect financial stability with household debt vulnerability and investor education mandates.

SEBI rule-reversal on derivatives will be framed as a statement-based question testing statutory powers and market stability trade-offs.

সংযুক্ত PYQ · 1

সংযুক্ত PYQ · 1

  • 2024PrelimsGS1

    Consider the following statements : 1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India. 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 3. In India, Stock Exchanges can offer separate trading platforms for debts. Which of the statements given above is/are correct?