"Sebi successful in breaking speculative momentum in options trading"

The restrictions imposed by the Securities and Exchange Board of India (Sebi) to curb speculative trading in futures and options market have had the desired effect.

- Ashish Chauhan, Managing Director and CEO, NSE, says retail investors should not be playing in derivatives BY SIDDHARTH ZARABI

In an interview with Business Today, Ashish Chauhan, Managing Director and CEO of NSE (National Stock Exchange), says the number of contracts has fallen by 50-60%, and the premium traded value has decreased 25-30%, because of Sebi’s actions. Edited excerpts:

SIDDHARTH ZARABI: The equity cult in India has spread far and wide across the country and the National Stock Exchange is present in nearly every pin code. Has the way Indians approach equity investing fundamentally changed?

ASHISH CHAUHAN: This can be answered in many ways. Currently, we have more than 19,300 PIN codes in India. And NSE is not present in only 28 PIN codesmost of those are airports, where you can’t normally stay, which means that we can’t do KYC (of an investor). When I began in 1991-92, there were only around a million people investing in stock markets.

I have seen this growth. Why are people investing in stocks? There’s a theory in economics which says that low per capita income countries do not have a good capital market. Why? Because poor people cannot save. And even if they do, they don’t trust even their brothers.

How will a person sitting in Srinagar or Dibrugarh or Jorhat put five hundred or a thousand rupees in a company in Salem, Tamil Nadu, which he or she is never going to visit? It’s a great leap of faith to invest money sitting 2,000-kilometers away, without knowing the promoters.

The reason this happens is trust, the trust of ordinary, poor Indians in other poor entrepreneurs. This is significant because nearly 85 million households, out of India’s nearly 350 million households, are investing in the markets.

SZ: How much of a role has technology and ease of use played in the rise of the equity cult?

AC: