Short-term equity derivatives: Let's consider turfing them out

Jane Street. When the name surfaced in the financial press, it looked like a new designer clothing label. I discovered it was a trading house which had come into focus at the Securities and Exchange Board of India (Sebi), the equity market watchdog, for alleged manipulation.

- INDIRA RAJARAMAN is an economist.

In focus was something called a Bank Nifty weekly options index (now closed), but there remain other weekly indices, run by the National Stock Exchange and Bombay Stock Exchange. Having never engaged with the stock market, either financially or academically, I had never peered at those instruments. But the compelling reason for not neglecting them now is that index options have entered the pages of the half-yearly Financial Stability Report (FSR) issued by the Reserve Bank of India (RBI), including the latest June 2025 issue.

Financial Stability Reports are an outcome of the global financial crisis of 2008. The G-20, as a wider group of countries than the G-7, also emerged as an outcome of that crisis. The International Monetary Fund (IMF) exhorted member countries to issue periodic reports on their internal financial stability. In India, this responsibility fell to RBI. The FSRs of RBI are very well-written, and should be compulsory reading for all students of economics at any level. My sense, though, is that they are not very widely read (I hope I am wrong on this).