It is unusual that SEBI did not call for an emergency board meeting following the Hindenburg and Congress allegations, especially given that Madhabi Buch has participated in four public events in Mumbai since then, though she has avoided press interactions—contrary to her previous practice of engaging with the media on the sidelines.
Additionally, the government has yet to issue an official response to these allegations, with the only governmental action thus far being the Public Accounts Committee of Parliament inviting her for a performance review.
Some observers argue that it is “unfair to expect the board to be answerable for the chairperson’s alleged non-disclosures, as she has been appointed by the government.”
The board is also expected to discuss eleven consultation papers that have passed their public consultation deadlines and are ready for final decisions.
Among the significant topics likely to be addressed are proposed measures to restrict retail participation in the Futures and Options (F&O) segment—a development the market is watching closely—and regulations for a ‘mutual fund lite’ aimed at passively managed funds.
Other discussions may include the introduction of a new asset class bridging Portfolio Management Services (PMS) and mutual funds, as well as an extension of the definition of ‘connected persons’ under insider trading norms to include certain relatives.
Since January, SEBI has published two studies highlighting the significant losses retail investors have faced in the derivatives market. The latest report, released last week, revealed that 93 percent of retail investors in the derivatives space lost an average of ₹2 lakh each in the last three fiscal years ending March 2024, amounting to a collective loss of ₹1.8 trillion during that period.
The anticipated reforms concerning the derivatives framework are expected to have a considerable impact on the market, aiming to curb the gambling-like trading behaviours that have proliferated with daily expirations of index-derivative contracts.
