MSE rejects report that claimed Sebi is stalling its entry into equity derivatives

Synopsis

MSE rejected a Reuters report claiming Sebi stalled its derivatives entry, calling it misleading. The exchange said it is fully operational, faces no regulatory bar, and continues engaging Sebi while strengthening systems, liquidity and market depth for sustainable growth ahead.

The Metropolitan Stock Exchange of India (MSE) on Tuesday issued a clarification, rejecting what it described as an inaccurate and misleading portrayal of the exchange in a recent Reuters report that suggested India's market regulator had stalled its entry into the equity derivatives segment.

In a statement, MSE said the Reuters article published on February 10 misrepresented the exchange's regulatory status and operational preparedness. The exchange said the headline and references to unnamed sources had created unwarranted doubt among market participants and stakeholders in India's capital markets.

MSE emphasised that it is a fully operational, Sebi-recognised stock exchange with a technology infrastructure that meets all prescribed standards. It said there are no restrictions imposed by Sebi on MSE from offering approved products, including equity derivatives, and rejected suggestions that its plans had been halted or paused by the regulator.

The exchange added that claims of Sebi imposing a gap or stopping the launch of equity derivatives were based on unsubstantiated speculation. It pointed out that its regulatory engagement with Sebi has been transparent and ongoing, and that the exchange continues to work on strengthening its systems, liquidity framework and market depth in line with regulatory expectations.

MSE also referred to an earlier statement which outlined initiatives aimed at improving participation in the equity segment, including the appointment of market makers to enhance liquidity and trading activity. These steps, it said, reflect its commitment to building a sustainable and inclusive marketplace rather than a speculative or opportunistic expansion.

The Reuters report, citing two regulatory sources, had said that India's regulator had asked the country's two newest exchanges -- MSE and National Commodity and Derivatives Exchange -- to focus on strengthening their equity cash market before entering equity derivatives.

The report noted that both exchanges had sought approvals late last year to launch and expand equity cash and derivatives products as part of efforts to diversify their business models.

According to the Reuters report, Sebi stance reflects continued regulatory caution amid the rapid growth of India's equity derivatives market, where derivatives premiums have grown to levels far higher than the cash market.

India's derivatives activity is heavily concentrated, with the National Stock Exchange of India accounting for over 70% of index options traded globally, based on data from the World Federation of Exchanges.

In its clarification, MSE said it respects the regulator's focus on market stability and orderly development, but stressed that it should not be portrayed as being barred or stalled from launching products. The exchange urged Reuters to correct the record and retract references that, in its view, undermine its market-building efforts and mischaracterise its regulatory standing.

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