The Securities and Exchange Board of India (Sebi) is looking to extend the tenure and maturity of equity derivatives products in a calibrated manner, its chairman Tuhin Kanta Pandey told reporters on the sidelines of an industrial event.

"We will consult with stakeholders on ways to improve, in a calibrated manner, the maturity profile of derivative products so that they better serve hedging and long-term investing," Pandey said at the FICCI Capital Markets Conference 2025 held today.

He further said that while equity derivatives are vital for capital formation, the regulator needs to ensure quality and balance. Sebi is exploring measures to strengthen the cash equities market, while improving the depth and quality of derivatives by introducing longer-tenure products.

However, market experts say this decision may not kill the appeal of short-term trades, but only shift the activity.

"One may call (the markets) 'satta,' and that requires short-term derivatives because they are cheaper, require less margin, and allow traders to exit quickly," says Trivesh D., COO of Tradejini brokerage firm. He says that long-term participation will take time to evolve as the markets are speculative in nature.

As per a Sebi report, more than 90% of retail investors have suffered heavy losses in F&O. Therefore, such longer tenure contracts would reduce the high risk associated with short-term frenzy. But such contracts would take a toll on liquidity, which is the true USP of F&O that attracts retail traders.

According to Trivesh, frequent, liquid opportunities drive retail volumes, and if weeklies are stopped, liquidity will shift to the nearest monthly or fortnightly contract. "Even when expiries were changed earlier to one expiry per index, there was seen drop in turnover, but the loss ratio of investors did not improve. The speculative nature remains, though overall volumes may see a slight dip."

This raises a question: who benefits from longer tenures?

Extension of tenures on derivatives would support institutional hedgers, and it manages the risk over months and not weeks, which would gradually shift the market toward deeper, more stable participation aligned with long-term economic goals.