India's markets regulator to tighten stock derivative, financial influencer rules on Thursday
MUMBAI -India's markets regulator is likely to tighten rules for stocks to be eligible for derivatives trading and ask brokers and mutual funds to stop enlisting unregistered financial influencers for their marketing campaigns, two sources with direct knowledge of the matter said.
Earlier this month, the markets regulator said in a discussion paper that stock derivatives should have sufficient liquidity and trading interest from market participants, a move expected to weed out derivatives linked to illiquid stocks.The notional value of options -- derivative contracts that give investors the option of buying or selling a security at a fixed price at a future trade -- traded in India more than doubled in 2023-24 to $907.09 trillion from the year before.
A surge in retail investors' participation in equity markets during the COVID-19 pandemic led to a proliferation of influencers pushing financial advice on social media platforms. More broadly, the regulator has formed a group of exchanges, brokers and mutual funds this week"to suggest any additional changes needed to remove risk of manipulation and ensure retail investors are protected against risks in options contracts," one of the sources said.
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