The government has hiked transaction taxes on equity derivatives in the Union Budget to curb speculative trading. India’s futures and options volumes are more than 500 times the country’s GDP, underscoring the need for rapid adjustments to rein in excessive activity, the report said.On the US-India trade deal, he said it would help bring more investments into the country.
“In principle, capital formation is always accelerated when there is a regulatory overhang that is removed and trade frictions are removed,” Pandey said. He added that removing uncertainties can stimulate investment decisions and achieve greater predictability of capital. “So overall I would say that with the deals that have been done on the trading side, a lot of uncertainties have been removed,” he said.
Algo Trades may not face OTR penalties anytime soon
The Securities and Exchange Board of India (Sebi) on Wednesday proposed changes to the order-to-trade ratio (OTR) framework for stock options, to exempt algorithmic orders placed by market makers from OTR penalties.
Under the revised framework, for equity option contracts, orders placed within a range of 40% above or below the last traded price (premium) “or ± ₹20, whichever is higher, will be exempted from the framework for imposing penalties for high OTR,” the regulator said in a circular. Currently, stock exchanges pose an economic barrier to the high order-to-trade ratio of algorithmic orders placed by stock brokers. Further, algorithmic orders placed by designated market makers for market making activities would not be taken into account while calculating OTR, Sebi said. “Orders placed within the range of ±0.75% of LTP will be exempt from the high OTR penalty framework,” the report said.
No new restrictions on equity derivatives
Pandey was speaking at the launch of a corporate bond outreach event, where he noted that measures are being considered to deepen the bond market. Sebi will engage with market participants on implementation of the Budget proposals related to corporate bonds, he said.
The recent budget has proposed a series of reforms aimed at improving liquidity in the secondary market.
“A market-making framework will support continuous two-way pricing, narrow bid-ask spreads and improve price discovery, making corporate bonds a more reliable asset class for investors,” Pandey said. “Derivatives on corporate bond indices and total return swaps will help investors manage risk efficiently. As secondary market liquidity improves and the investor base expands, corporate bond markets will become a more reliable and cheaper funding route for issuers.”
In FY25, issuers raised around ₹10 lakh crore through debt issuances. Outstanding corporate bonds have grown at around 12% CAGR from ₹17.5 lakh crore in FY15 to ₹58 lakh crore at end-December 2025, according to Sebi data.
Pandey noted that the market is still heavily tilted towards highly rated issuers, which account for 90% of all bond issuance. Nearly 60% of funds are raised by financial institutions, which limits sectoral diversity.
“This concentration limits the choice available to investors and restricts fair pricing across different sectors of the economy. The secondary market remains shallow as institutional investors take a ‘buy-andhold’ approach rather than active trading,” he said.
This is exacerbated by the dominance of private placements, which can reduce transparency and make it more difficult for smaller issuers to access the market, he added.
There are more than 5,600 companies listed on the stock market, but only about 770 entities have raised money through the debt market. Of these, 272 have tapped the market multiple times, while many have issued debt only once or twice, Sebi data shows.
He also said that a Sebi survey has revealed that Indians know more about cryptocurrencies than bonds.
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