Shares of capital-market-linked firms including Bombay Stock Exchange (BSE) and Angel One Ltd witnessed sharp declines on Thursday, falling over 7% intraday, after the Securities and Exchange Board of India (SEBI) announced plans to recalibrate the tenure and maturity profile of equity derivative products. The move, aimed at improving market depth and promoting long-term investing, triggered immediate reactions from traders and investors concerned about its impact on short-term trading volumes.
Market Reaction: Sharp Selloff in Capital Market Stocks
BSE shares dropped as much as 7.44% to an intraday low of ₹2,335.20, down from the previous close of ₹2,523. The stock had opened higher but reversed course following SEBI Chairman Tuhin Kanta Pandey’s remarks at the FICCI Capital Market Conference 2025. Angel One also saw a steep decline, falling 7.01% to ₹2,530.15 before settling at ₹2,547.90.
- BSE Market Cap: ₹94,768 crore
- Angel One Market Cap: ₹72,430 crore
- Trading Volume: Over 71 lakh shares exchanged on NSE for BSE alone
The selloff extended to other capital-market infrastructure firms such as CDSL, which also saw declines, reflecting broader concerns about regulatory changes affecting trading behavior.
SEBI’s Reform Agenda: Longer Tenure, Better Maturity
SEBI Chairman Tuhin Kanta Pandey stated that the regulator is exploring ways to extend the tenure and maturity of equity derivative contracts in a calibrated manner. The goal is to enhance the utility of derivatives for hedging and long-term investing, rather than speculative short-term trading.
“We will consult with stakeholders on ways to improve, in a calibrated manner, the maturity profile of derivative products so that they better serve hedging and long-term investing,” Pandey said during the conference.
The proposed reforms are part of SEBI’s broader strategy to strengthen the cash equities market and improve the quality and depth of derivatives trading. The regulator emphasized that while derivatives are vital for capital formation, their current structure may be skewed toward ultra-short-term speculation.
Why the Market Reacted Sharply
The equity derivatives segment has seen explosive growth in recent years, particularly among retail traders. According to SEBI’s own research:
- 91% of individual traders in F&O incurred net losses in FY25
- Over ₹1 lakh crore in retail capital was lost, which could have otherwise supported long-term investment and capital formation
SEBI’s move to extend derivative tenures is seen as a corrective measure to reduce speculative churn and promote more responsible trading. However, firms like BSE and Angel One, which benefit from high-frequency trading volumes, are expected to see short-term pressure on revenues and client activity.
Industry Perspective: Balancing Growth with Stability
Market experts believe SEBI’s proposal is a step toward aligning India’s capital markets with global standards, where longer-tenure derivatives are common and used for genuine hedging. However, the transition may require adjustments in trading platforms, investor education, and product design.
Angel One and BSE, both heavily reliant on retail participation and active trading volumes, may need to recalibrate their business models to accommodate a shift toward longer-term instruments.
Looking Ahead: What Investors Should Watch
While the immediate reaction has been negative, the long-term implications of SEBI’s reforms could be constructive for market stability and investor protection. Key developments to monitor include:
- Stakeholder consultations and draft guidelines from SEBI
- Changes in derivative contract structures and expiry cycles
- Impact on brokerage revenues and trading platforms
- Investor education initiatives to support the transition
Conclusion: Regulatory Reset Sparks Volatility, But Signals Maturity
The sharp dip in BSE and Angel One shares underscores the market’s sensitivity to regulatory shifts—especially those affecting trading volumes and product structures. SEBI’s push for longer-tenure equity derivatives is a bold step toward deepening India’s capital markets and curbing speculative excess.
While firms may face short-term headwinds, the move could pave the way for a more balanced, investor-friendly ecosystem that prioritizes sustainability over speed. For now, volatility may persist, but the direction signals a maturing market with stronger foundations.
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