India's Regulatory Stance: Ban on Stock Derivatives Trading for Two Exchanges

India's regulatory authorities have prohibited two domestic exchanges from engaging in stock derivatives trading, prioritizing the development of stock trading activities, according to sources familiar with the matter. According to Jin10, the National Commodity and Derivatives Exchange (NCDEX) and the Metropolitan Stock Exchange (MSE) had applied to the Securities and Exchange Board of India (SEBI) late last year for approval to launch and expand stock spot and derivatives products. NCDEX primarily trades agricultural products, while MSE focuses on currency derivatives, with limited stock trading volumes. Both exchanges have been seeking to diversify their business operations. SEBI's decision reflects its cautious approach towards India's rapidly growing stock derivatives market, which currently has a total volume approximately twice that of the spot market. In major global markets, this ratio is typically only 2% to 3%.