Capital markets regulator, the Securities and Exchange Board of India (SEBI), is “advocating for structural reforms” in India’s derivatives markets, according to a report by the Financial Times.
Reuters noted that this moves comes after steps to limit participation of unprotected retail customers, and a temporary ban on United States trading firm Jane Street over alleged manipulation, the FT report added.
Speaking to FT, SEBI Chairman Tuhin Kanta Pandey said the regulator is “trying to curb unfair practices in the market to protect small investors, as the volumes have come down but not to the extent that is desirable.”
Notably, in its latest report, released on July 7, SEBI found that 91 per cent of individual traders incurred net losses trading in futures and options (F&O) in FY25, with total losses exceeding ₹1 trillion.
‘SEBI dedicated to safeguard market integrity’: Pandey
Earlier, speaking at the Future Proof Forensics 2025 event in Mumbai on August 2, Pandey had echoed similar sentiments, according to an ANI report.
He noted that financial frauds in the Indian capital markets ranged from simple diversion of shareholder funds to use of complex structures and transactions to bypass regulatory safeguards, adding that SEBI has used forensic audits to uncover several such frauds in recent times.
“We must safeguard market integrity, the foundation that fuels investor participation and sustains capital formation,” Pandey said.
On financial frauds, ‘SEBI doing forensic audits’
Citing examples, Pandey said that SEBI found instances where listed companies engaged in fraudulent practices to siphon off investor funds; inflated financials by entering into circular transactions with a number of named lending entities; or siphoned off proceeds from preferential allotment, which should result in cash flow to the company.
“These are egregious cases. I’m not saying this is a generalised phenomenon. I’m just giving you certain examples of egregious cases which have been detected,” Pandey said, adding that the negative impact of such financial frauds on the securities market is tremendous and SEBI is doing forensic audits to uncover theses kind of financial frauds.
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