'Trading volumes not back to their peak but green shoots emerging'

QA: Securities and Exchange Board of India’s (Sebi’s) tightening of the derivatives framework has dented trading volumes, but the industry is gradually adapting to the new regime, Gaurav Seth, chief executive officer (CEO) and managing director (MD) of Spaisa Capital, tells Samie Modak, in an interview in Mumbai. Edited excerpts:

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There has been a decline in trading volumes compared to last year. What are the key reasons behind this moderation?

■ Market regulator Sebi’s October moves — a part of the broader push to curb speculation and strengthen stability in the equity derivatives segment — is one of the biggest factors behind the decline. Changes in lot size, extreme loss margin requirement on expiry, and removal of calendar spread margin benefit also adversely affected volumes. All this coupled with reduction of indices weekly expiries led to an over 30 percent decline in volumes. Sebi’s report on retail losses also raised awareness among traders, leading to a reduction in speculative and risky trades. Markets, too, have moderated over these months leading to contraction in trader interest.

Since February 2025, both cash and futures and options (F&O) turnovers have picked up. Do you think the market has bottomed out? What’s driving the recent recovery?