The Bombay Stock Exchange in India will implement price-limit safeguards for equity derivatives—what changes will this bring to the relevant markets?

1. Before looking at others, let’s first look at ourselves. 2. What is ‘price-limit safeguard’ for equity derivatives? Experts explain that it is intended to enhance market stability and protect investor interests, prevent market manipulation and malicious trading activities, and uphold investor confidence. By capping price volatility, the derivatives market will become more stable, helping reduce trading risks and attract more investors. Moreover, the price-limit mechanism also contributes to improved market efficiency and fairer competition, laying a foundation for the healthy development of India’s capital markets. Siddhartha Bhaiya, a Mumbai-based fund manager, recently remarked at an event that the boom in derivative trading has turned options trading into ‘Las Vegas of India.’ At an event jointly organized by the Indian Association of Investment Professionals (IAIP) and the CFA Institute India, the Managing Director and Chief Information Officer of Aequitas Investment Consultancy Pvt Ltd stated that currently 90% of trading volume in India comes from derivatives. ‘Exchange data shows that 90% of retail participants in the equity derivatives segment are losing money—so effectively, about 80% of them are losing money. It’s not exactly 80%, but what I mean is the net balance: those who may be trading combinations of derivatives and equities are also losing,’ he said. ‘Right now, derivatives represent India’s biggest form of gambling. It’s like Las Vegas of India—but without any charm.’ A major analysis by India’s capital market regulator, the Securities and Exchange Board of India (SEBI), found that although the number of individual traders in the equity derivatives segment grew exponentially between FY2019 and FY2022, the vast majority incurred losses. 3. Why implement price-limit safeguards? Because losses have become unsustainable—and participation is dwindling! India’s $4.3-trillion market adopted the so-called T+2 settlement cycle as early as 2003—14 years ahead of the U.S.—and became the second country after China to adopt the T+1 model; the U.S. is scheduled to roll out T+1 this May.

India has proactively exempted four Chinese companies. Given its prior restrictions, what strategic intent lies behind this move?

New Delhi: The decision to permit overseas companies with up to 10 per cent Chinese shareholding to invest in India under the automatic route has begun to yield results, with 29 FDI proposals totalling about ₹4,895.65 crore reported so far, an official said. Secondly, these ₹50-billion investment proposals do not originate from China: The 29 investments have been reported from investors/entities based in jurisdictions including Mauritius, the United States, Korea, Japan, Singapore, Luxembourg and the Cayman Islands. Thus, the facts described in this news report are: (1) India has relaxed investment restrictions for foreign enterprises: overseas companies holding no more than 10% Chinese/Hong Kong equity may now invest in India via the automatic approval route in designated sectors; (2) Since implementation of this new regulation, investors or entities headquartered in Mauritius, the U.S., Korea, Japan, Singapore, Luxembourg, and the Cayman Islands have collectively submitted 29 investment proposals, totaling approximately USD 520 million. Both points are factual. It is possible—though unconfirmed—that some of these firms headquartered in the U.S., Korea, Japan, etc., hold minority Chinese stakes; at most, such capital could be termed ‘third-country capital with minor Chinese equity participation’—a categorically different concept from ‘Chinese enterprises investing in India,’ both in nature and substance. Yet through selective wording and framing, the report creates the impression that ‘as soon as India eased investment restrictions, Chinese enterprises rushed to invest in India.’ The report even openly cites Vivo and SAIC Motor as examples to illustrate India’s current strategy: India appears increasingly inclined toward a structure wherein Indian companies retain controlling stakes while Chinese firms contribute technology, manufacturing expertise, and supply-chain resources. The approval of the Vivo–Dixon joint venture may be the clearest example: under the agreement, Dixon holds the majority stake, while Vivo holds a minority stake. A similar structure is evident in the collaboration between display manufacturer HKC and original design manufacturer Longcheer. (Note from the author: HKC (Hua Xing) and Longcheer are two Chinese enterprises, which also have a joint venture with Dixon.)

India Eases Foreign Investor Access to Commodity Derivatives, Expands Scope of Portfolio Managers

15 hours ago

India's SEBI permits foreign investors to trade physically settled non-farm commodity contracts, aiming to boost liquidity in energy and bullion markets while expanding portfolio manager mandates.

reuters

2026-09-24

India Eases Foreign Investor Access to Commodity Derivatives, Expands Scope of Portfolio Managers

India Eases Foreign Investor Access to Commodity Derivatives, Expands Scope of Portfolio Managers

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