RBI curbs on bank-guarantee margin funding may cut FY28 options turnover by up to 20%, report says
AI Market Summary
RBI rules curbing bank guarantees for derivative margin funding raise leverage costs for proprietary and HFT firms, a key driver of India's index options liquidity. With commercial paper funding materially more expensive, participation and turnover could contract, pressuring exchange fee revenues and earnings expectations at NSE/BSE. The report estimates index options average daily turnover down ~18–20% by FY28, with smaller declines in futures.
Impact level
● Medium
Affected assets
NCSINIFTY52USD/USDT-1.50%
AI Insight · NCSINIFTY52USD/USDTAI Insight
▼ Bearish
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The Reserve Bank of India has introduced rules limiting the use of bank guarantees (BGs) for leveraged funding in derivatives. A report says the main alternative—raising funds via commercial papers (CPs)—costs around 11%, versus about 1% for BGs, which could reduce participation by proprietary traders including high-frequency trading firms. It expects average daily turnover (ADTO) in options to fall 18–20% in FY28, pressuring revenue and earnings expectations for exchanges such as NSE and BSE, according to Dolat Capital.
