Economy : Financial Market Instruments

Q 3 / 16

UPSC CSE Prelims 2025

Consider the following statements :
  1. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
  2. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time.
  3. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
Which of the statements given above are correct?

EXPLANATION

Correct Option

Statement 1 is correct.

  • India has become a global leader in equity options trading.
  • In the first quarter of 2024, Indian exchanges accounted for over 84% of all equity options contracts traded worldwide. This marks a substantial increase from approximately 15% a decade prior, reflecting an unprecedented boom in derivatives market activity.

Statement 2 is correct.

  • India's stock market has grown rapidly in the recent past.
  • In January 2024, India's stock market capitalization reached $4.33 trillion, surpassing Hong Kong's $4.29 trillion. This positioned India as the world's fourth-largest stock market by market capitalization.
  • This surge was driven by factors such as strong domestic investor participation, robust corporate earnings, and foreign portfolio inflows.

Incorrect Options

Statement 3 is incorrect.

  • The Securities and Exchange Board of India (SEBI) serves as the regulatory authority for India's securities markets.
  • SEBI actively monitors and regulates market activities, including options trading. It issues warnings to small investors about the risks of derivative products.
  • Additionally, SEBI takes action against unregistered financial advisors, ensuring investor protection and market integrity.
SOURCEThe Hindu/Indian Express/PIB [Month Year]